Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

Oral Answers to Questions — UNEMPLOYMENT.

COUNTY OF DURHAM.

Mr. BATEY: 1.
asked the Minister of Labour the number of persons in receipt of benefit from the Unemployment Insurance Fund in the county of Durham and the number in receipt of transitional payments during the same period?

Employment Exchanges and Juvenile Employment Bureaux in the County of Durham (including Associated County Boroughs).


Date.
Insured juveniles, aged 16 and 17 recorded as unemployed.
Uninsured juveniles aged 14 to 17, registered as unemployed.


Number.
Per cent. of estimated number of insured juveniles at preceding July.


20th March, 1933
4,105
13.7
5,366


19th March, 1934
2,694
10.5
5,725

I regret that the information in the possession of my Department does not enable me to express the numbers of uninsured juveniles unemployed as percentages of the total numbers of such juveniles available for employment, nor do I know how many unemployed juveniles there may be who do not register for employment.

DERELICT AREAS (INQUIRIES).

Sir LUKE THOMPSON: 3.
asked the Minister of Labour whether he is now in a position to make any further statement as to the intention of the Government to obtain further information concerning the position in the derelict areas?

Mr. GEORGE HALL: 44.
asked the Prime Minister whether he is aware of the increasing unemployment and distress

The MINISTER of LABOUR (Sir Henry Betterton): At 19th March, 1934, the number of persons on the registers of Employment Exchanges in the county of Durham (including the associated county boroughs) with claims admitted for insurance benefit and transitional payments were 29,385 and 94,274 respectively.

Mr. BATEY: 2.
asked the Minister of Labour the total number and percentage of juveniles unemployed in the county of Durham for the week ended 31st, March, 1934, and the corresponding week in 1933?

Sir H. BETTERTON: As the reply includes a number of figures, I will, if I may, circulate a statement in the OFFICIAL REPORT.

Following is the statement

The particulars asked for, so far as available, are given in the following table:

in the steam coal areas in South Wales; and whether the Government have any proposals for dealing with this matter?

Sir H. BETTERTON: The Government have for some time been inquiring into the special problem presented by the derelict areas and have decided before proceeding further to have inquiries made in typical places within the districts of Durham, South Wales, Cumberland and Scotland, and for this purpose they have asked the following to make investigations on their behalf:
In Cumberland, the Chancellor of the Duchy of Lancaster;
In Durham and Tyneside, the Civil Lord of the Admiralty;
And in South Wales, Sir Wyndham Portal.
I am not yet in a position to give the name of the Scottish investigator, but will do so as soon as possible.

Mr. HALL: Can the right hon. Gentleman say when this inquiry is likely to commence and what interests will be consulted by the persons whom he is asking to hold the inquiry?

Sir H. BETTERTON: The inquiry will I hope commence at once—certainly without any avoidable delay—and it is my intention that the investigators should consult every interest from whom they think they will be able to get useful information.

Mr. LAWSON: Will the right hon. Gentleman say whether the object of the inquiry is to find alternative occupations for the surplus population; and is he not aware that already there has been a survey of all these areas which showed definitely the amount of surplus population, and also that there has been the recent inquiry by the "Times" special correspondent?

Sir H. BETTERTON: What the hon. Gentleman says is true about the surveys which were made some years ago. I think the report is about three years old and a very valuable report it is. With regard to the recent inquiry to which the hon. Gentleman refers, that only applied to one area. Each area may, and I think does, present a different problem. I want the entire problem surveyed as a whole, and certainly I hope that that will be one of the objects of the inquiry.

Mr. GRAHAM WHITE: Will this inquiry be limited strictly to the districts which the right hon. Gentleman has mentioned, or will the commissioners have power to deal with any isolated districts which they think ought to be brought within the scope of the inquiry?

Mr. CHORLTON: Will the inquiry also refer to the eastern districts of Lancashire—the cotton districts?

Sir H. BETTERTON: I hope I shall not be pressed to go any further at present than I have gone. I shall be willing, later on, to consider the other questions raised, but I want a report on these particular areas first.

Mr. LAWSON: Will a report of the result of the investigation be published?

Sir H. BETTERTON: The answer to that question is "no," and for this reason. If I rightly visualise the help which I hope to get from the inquiry, I think that some—perhaps the most valuable—of the information will be verbal. Therefore, to publish any written communications made to the Government would be misleading rather than otherwise.

Mr. BATEY: Will the Minister tell us what use there is in making an investigation like this when the Government already have all the information? Is it not simply wasting time?

Sir MURDOCH McKENZIE WOOD: Can the Minister say what parts of Scotland will be the subject of investigation?

Sir H. BETTERTON: The areas which I had in mind were certain areas of Lanarkshire and possibly also some parts, of Fife, but principally the distressed mining areas of Lanarkshire.

PUBLIC ASSISTANCE.

Mr. LENNOX-BOYD: 17.
asked the Minister of Health if any cases have been brought to his notice within the last 12 months in which local authorities have employed on grant-aided or other public works men who were in receipt of poor relief immediately before employment with a view to qualifying them for unemployment benefit; and what is the attitude of his Department in a matter of this nature?

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH: (Mr. Shakespeare): The reply to the first part of the question is in the negative, and the second part does not therefore appear to arise.

CASTLEFORD AND PONTEFRACT.

Mr. T. SMITH: 4.
asked the Minister of Labour the number of persons in receipt of unemployment benefit and transitional payments, respectively, at Castleford and Pontefract, for the last six years to date?

Sir H. BETTERTON: As the reply includes a table of figures, I will, if I may, circulate a statement in the OFFICIAL REPORT.

Following is the statement:

The table below gives the information desired for June, 1930, the earliest date
for which these figures are available, and for March of each year since 1981. In view of the changes in the conditions for the receipt of insurance benefit, which came into operation in November, 1931, the figures for June, 1930, and March, 1931, are not strictly comparable with those for later dates.

Insured persons with claims admitted.


—
Castleford Employment Exchange
Pontefract Employment Exchange


23rd June, 1930—




Standard Benefit
3,605
1,061


Transitional Benefit.
1,072
469


23rd March, 1931—




Standard Benefit
4,236
1,310


Transitional Benefit.
1,088
544


21st March, 1932—




Insurance Benefit
2,406
1,911


Transitional Payments.
1,939
975


20th March, 1933—




Insurance Benefit
2,216
1,655


Transitional Payments.
2,721
1,165


19th March, 1934—




Insurance Benefit
1,300
1,027


Transitional Payments.
2,813
1,137

Oral Answers to Questions — DISCHARGED SOLDIER (FINE).

Mr. EDWARD WILLIAMS: 5.
asked the Secretary of State for the Home Department whether he is prepared to institute an inquiry into the case of James Merriman, who was arrested on 4th April, 1934, for a fine of 15s. which was imposed upon him for being involved in 1913 in a street scuffle, who served in France during the War and was wounded twice, for which he received a disability pension of 16s. weekly, has been unemployed for seven years and has a wife and eight children, and was taken from his bed and detained at the local police station all night and taken to Cardiff prison next day without having appeared before the magistrates?

The SECRETARY of STATE for the HOME DEPARTMENT (Sir John Gilmour): I have already made inquiries and I regret that the action taken in this case was not in accordance with the advice which has from time to time been
given by the Home Office that the police should consult the justices concerned before executing upon a discharged member of His Majesty's Forces a warrant of commitment to prison in default of payment of a fine imposed before he joined the colours. In the present case this recommendation was unfortunately overlooked by the police; but I am glad to say that Mr. Merriman was released on the day after his reception into prison, the Governor having brought the ease to the notice of the British Legion, who paid the fine out of the funds at their disposal.

Mr. WILLIAMS: Will the right hon. Gentleman take some action to censure the officer or the person responsible for the vindictive treatment meted out to this man?

Sir J. GILMOUR: No, Sir, I do not think that such action is called for. The fact is that the police exercised considerable restraint in bringing to the notice of this man on several occasions the necessity of meeting this fine.

Mr. WILLIAMS: Is the Home Secretary aware that ex-Inspector Lister in that division, with whom this man was serving in the Army and who died quite recently, explained to the person involved that this fine had been wiped off the books and that it would be unnecessary for him to pay; and will the right hon. Gentleman make inquiries into that matter?

Sir J. GILMOUR: I am willing to make inquiries, but the information which I have is clearly that the man was made well aware of the fact that he was liable to the fine. I have no knowledge of what the hon. Gentleman now states.

Mr. WILLIAMS: Will the right hon. Gentleman make inquiries into it, in order to see whether some compensation ought not to be paid for the iniquitous treatment of this man?

Oral Answers to Questions — POLITICAL PARTIES (UNIFORMS).

Mr. VYVYAN ADAMS: 6.
asked the Home Secretary whether he is now in a position to state what action it is proposed to take with regard to the wearing of political uniforms?

Sir J. GILMOUR: I regret I am not yet in a position to make any statement on this matter.

Brigadier-General NATION: Is not the chief difficulty in connection with the definition of the word "uniform" and would not the word "uniform" apply to the members of a society who wore red beards or false noses?

Mr. PIKE: Is not the difficulty in the definition of the word "political"?

Mr. THORNE: Does the right hon. Gentleman recognise that the psychology of wearing uniforms of any kind, outside the recognised forces, and drilling and training, means upsetting the democracy of this country?

Oral Answers to Questions — TRANSPORT.

POLICE CABS.

Mr. HALL-CAINE: 7.
asked the Home Secretary whether, in view of the difficulties which confront the mobile police in following road offenders, he will consider providing them with motor-cars capable of faster speeds and fitted with special sirens which would clear a way for them through the traffic in the same way as fire-engines?

Sir J. GILMOUR: I think the hon. Member's question is based on a misapprehension. When arrangements were made by my Department with the Ministry of Transport for the institution of the mobile police the object was to bring about a better standard of road behaviour among drivers generally by the presence of the patrols on the roads rather than by chasing offenders in fast cars. For this purpose it was not considered either necessary or desirable to equip the patrols with particularly high power vehicles and I am not aware of any need for departing from the present policy.

CONTRACT CABRIAGES.

Mr. DUNCAN: 31.
asked the Minister of Transport if he will give adequate time between the publication of his amendment to the 1930 Traffic Act dealing with contract carriages and its discussion on the Committee stage of the Bill, to enable the trade interests concerned to make any representations thereon?

The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Lieut.-Colonel Headlam): My hon. Friend hopes to be in a position to place
this amendment on the Order Paper at a very early date, so that the interests concerned will have ample time to consider it before it is discussed in Committee upstairs.

BATH ROAD, WILTSHIRE.

Sir PERCY HURD: 32.
asked the Minister of Transport whether he is aware of the increasing danger to human and animal life and limb and to property, especially in the villages, arising from the fast through traffic on the Bath Road, in Wiltshire, following upon the widening of the highway; and whether he will confer with the authorities in Wiltshire as to the best means of minimising this danger?

Lieut.-Colonel HEADLAM: No representations have been made to my hon. Friend, the Minister of Transport, on this subject by local authorities in Wiltshire, but he would, of course, be willing to give consideration to any proposals they may put forward. I am sending a copy of my hon. Friend's question to the County Council. I would also draw his attention to the various provisions of the Road Traffic Bill now before Parliament.

Oral Answers to Questions — AFFILIATION ORDERS.

Mr. HALL-CAINE: 3.
asked the Home Secretary whether his attention has been called to the recent case of Mr. John James Smith, in which it was decided that once an affiliation order has been made against an individual no court can revoke that portion of the order which judges a man to be the putative father of the child concerned, although the liability to maintain payments may be discharged; and whether he will consider the introduction of amending legislation to deal with this matter?

Sir J. GILMOUR: It had previously been decided by the courts that an adjudication of paternity in an affiliation order made by magistrates is not open to review after the time for appealing has expired. I propose to await the report of the Committee dealing, inter alia, with the enforcement of affiliation orders before coming to a decision as regards the desirability of legislation on the point.

Oral Answers to Questions — POULTRY-KEEPING.

Captain ERSKINE-BOLST: 9.
asked the Home Secretary whether the attention of the police has been called to the use of the so-called battery system of poultry-keeping; and, if so, whether a test case is contemplated to sift allegations of inherent cruelty?

Sir J. GILMOUR: My attention had not been previously called to the matter, but such information as I have been able to obtain does not suggest that action by the police is called for.

Oral Answers to Questions — NON-PROVIDED TRAINING COLLEGES (GRANTS).

Mr. RHYS DAVIES: 11.
asked the Parliamentary Secretary to the Board of Education whether it has yet been decided to make special grants per student to denominational training colleges; and, if so, what is the amount involved?

The PARLIAMENTARY SECRETARY to the BOARD of EDUCATION (Mr. Ramsbotham): My Noble Friend assumes that the hon. Member refers to the question of special financial assistance to meet the situation resulting from the further limitation of the number of students in training in 1934. As recently announced in Circular 1436, the board propose to pay an additional grant for the year 1934–35 to non-provided training colleges, other than the training departments of universities or university colleges, at the rate of £20 for each unit by which the approved number in 1934–35 of recognised students seeking a code qualification falls short of the corresponding number allowed by the board for 1933–34.

Mr. DAVIES: Will the hon. Gentleman be good enough to inform the House why the Board of Education in granting money draw this invidious distinction between non-provided training colleges and the other colleges?

Mr. RAMSBOTHAM: The reason for the distinction is that the local education authority colleges are aided on a completely different basis and receive percentage grants.

Mr. DAVIES: Is it not a fact, therefore, that this money is given to one set of training colleges and that the other colleges are at a financial disadvantage?

Mr. RAMSBOTHAM: The local education authority colleges suffer no disadvantage at all under the system of percentage grants. The non-provided colleges will suffer some difficulty as the result of the limitation of the number of students, and this grant is given for one year to ease their position.

Oral Answers to Questions — HOUSING.

PUBLIC CHARGE.

Mr. CRAVEN-ELLIS: 12.
asked the Minister of Health the total annual charge upon the taxpayers and ratepayers for housing, including all schemes undertaken since 1918; what is the estimated annual charge for the recently announced slum-clearance and overcrowding schemes; and for how many years will all these charges remain a liability upon the taxpayers and ratepayers?

Mr. SHAKESPEARE: As the answer involves a tabular statement, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.

Following in the answer:

Housing Schemes—England and Wales.

Amount of Exchequer contributions paid in each financial year, and the amount of expenditure incurred by local authorities which was not met out of specific receipts.

Financial Year.
Exchequer Contributions paid.
Expenditure by local authorities not met out of specific receipts.
Total.



£
£
£


1919–20
20,455
560,506
580,961


1920–21
3,097,301
1,180,345
4,277,646


1921–22
9,109,366
1,070,210
10,179,576


1922–23
9,655,398
816,477
10,471,875


1923–24
7,857,815
769,667
8,627,482


1924–25
8,050,132
1,240,659
9,290,791


1925–26
7,833,756
1,812,062
9,645,818


1926–27
8,376,044
2,375,887
10,751,931


1927–28
9,540,976
2,835,718
12,376,694


1928–29
10,669,974
3,003,786
13,673,760


1929–30
11,132,803
2,588,591
13,721,394


1930–31
11,875,806
3,076,245
14,952,051


1931–32
12,731,603
2,995,427
15,727,030


1932–33
13,349,758
Information not yet available.
—


1933–34
13,432,626
—

It is estimated that the annual charge to the Exchequer and local authorities when the programmes of slum clearance schemes so far submitted have been carried into effect will be about £3,100,000 and £1,070,000 respectively. It is not yet possible to furnish an estimate of the annual charge in connection with the proposed scheme for the relief of overcrowding.

These charges will remain a liability upon the Exchequer up to a maximum period of 60 years from the date of completion of the houses subject to some variation (1) when loans are repaid under the Act of 1919 and (2) when subsidy ceases at the end of 20 years in the case of the Act of 1923 and at the end of 40 years in the case of the Acts of 1924 and 1930.

The liability on the local rates will continue with some variation for substantially the same period.

FINANCIAL PROVISIONS ACT.

Mr. McKEAG (for Mr. CURRY): 18.
asked the Minister of Health what number of houses have been and are being built at the 31st March, 1934, in respect of which guarantees have been given by local authorities as provided in the Housing (Financial Provision) Act, 1933; what are the several localities (local government districts) in which the said houses are situated and the number of houses in each locality; and what number of houses in each of the aforesaid localities are being provided respectively by private-enterprise builders and housing trusts or other like quasi-philanthropic bodies?

Mr. SHAKESPEARE: Complete returns for the period up to 31st March last have not yet been received from the local authorities concerned. As soon as practicable I will send to my hon. Friend a statement giving the information available for these returns.

Oral Answers to Questions — POLICE FORCES (STATISTICS).

Mr. MITCHESON: 10.
asked the Home Secretary the strength of the police forces of England and Wales on the latest available date and the number of police pensioners on the same date?

Sir J. GILMOUR: The average daily strength of the police forces of England
and Wales (excluding police firemen and other additional constables) during the year ending on 29th September, 1933, was 56,924. The number of ex-police officers in receipt of pensions on 31st March, 1933, was 34,330.

Oral Answers to Questions — NATIONAL HEALTH INSURANCE (JUVENILES).

Mr. RHYS DAVIES: 13.
asked the Minister of Health what reply has been returned to the representations he has received expressing the desire that young persons should, on entering employment after leaving school, be brought within the scope of national health insurance as in the case of young persons under the provisions of the Unemployment Bill now before Parliament?

Mr. SHAKESPEARE: My right hon. Friend has promised to give the matter careful consideration, but has been obliged to point out the serious financial difficulties which make it impracticable to adopt the proposal at the present time.

Mr. DAVIES: Is the hon. Gentleman aware that employers in many parts of the country dismiss boys and girls from their employment when they arrive at 16 because of this contribution to the National Health Insurance scheme; and, in view of the fact that the Unemployment Bill gets over that difficulty in respect of Unemployment Insurance contributions, will the hon. Gentleman look into the subject once more?

Mr. SHAKESPEARE: We have it in mind.

Oral Answers to Questions — POOR LAW RELIEF.

Mr. T. SMITH: 16.
asked the Minister of Health the number of persons in receipt of poor relief in England and Wales on the last available date, giving separate figures for men, women, and children, and comparable figures for the same period during the past three years?

Mr. SHAKESPEARE: As the answer contains a number of figures in tabular form, I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.

Following is the answer:

The total numbers of persons (men, women and children) in receipt of poor
relief in England and Wales (excluding rate-aided patients in mental hospitals, persons in receipt of domiciliary medical relief only and casuals) on Saturday, the 24th March, 1934, and on the corresponding days in 1933, 1932 and 1931 were 1,413,780, 1,357,236, 1,188,077, 1,038,432, respectively.

—
Total persons in receipt of poor relief (excluding rate-aided patients in mental hospitals).


Men.
Women.
Children.
Total.


1st January, 1934
420,686
481,661
500,378
1,402,725


1st January, 1933
406,708
470,733
498,204
1,375,645


1st January, 1932
332,287
406,844
403,894
1,143,025


1st January, 1931
288,825
372,237
353,871
1,014,933

Oral Answers to Questions — NATIONAL FINANCE.

LOCAL GOVERNMENT ACTS, 1929.

Mr. G. HALL: 23.
asked the Financial Secretary to the Treasury if he will give a statement showing the charge which has fallen upon the Treasury for the years 1930, 1931, 1932 and 1933, respectively, in consequence of the De-rating Act, 1928?

The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha): I presume the hon. Member is referring to the two Local Government Acts of 1929 under which rating relief to industrial and other property was actually given. As the cost to the Exchequer of these two Acts for the years 1930 to 1933 involves a number of figures, I will circulate a statement in the OFFICIAL REPORT.

Year.
Exchequer grants to local athorities.
Discontinued grants on basis of standard year.
Road Fund Contribution.*
Net charge on Exchequer.


1930
51,442,000
18,317,000
3,000,000
30,125,000


1931
51,442,000
18,317,000
3,000,000
30,125,000


1932
51,442,000
18,317,000
3,000,000
30,125,000


1933
51,802,000
18,317,000
3,000,000
30,485,000


* Under Section 87 (2) of the Local Government Act and Section 54 (2) of the Local Government (Scotland) Act, sums totalling approximately £601,000 a year ceased to be withheld from the issues from the Exchequer to the Road Fund and represent consequently an additional charge on the Exchequer.

There are also certain additional charges on the Exchequer for the benefit of local authorities.

The weekly returns from which these figures have been obtained do not distinguish the numbers of men, women and children. These particulars can only be obtained from the annual returns as to poor relief on the 1st January and the figures are as follow:

Following is the statement:

TOTAL COST to the Exchequer of the Local Government Acts, 1929, in 1930 to 1933.

The total additional cost to the Exchequer of the Local Government Acts, 1929, is made up in each year of the grants to local authorities for that year less the amount on the basis of the standard year of the percentage and other grants which were discontinued when the new scheme came into operation, less also the contribution from the Road Fund (apart from its payment in respect of discontinued road grants). The figures for the financial years 1930 to 1933 (the amounts included therein for Scotland being in respect of years beginning on the 16th May) are set out below:

(1) The decrease in the products of a 1d. rate owing to de-rating had the effect of increasing the Exchequer liability in
respect of education and housing by about £1,200,000 in each of the above years.

(2) The provisions of Section 114 of the Local Government Act as regards mitigation of the liability of county and county borough councils in respect of loans raised by Poor Law authorities and the corresponding provisions as regards Scotland in Section 24 of the Local Government (Scotland) Act, involve an extra charge on the Exchequer, partly in the form of remission of loan charges and partly in the form of grants, of nearly £300,000 a year.

WAR DEBTS.

Mr. CRAVEN-ELLIS: 19.
asked the Chancellor of the Exchequer whether, in view of the harm done by the payment of War debts to international trade when gold was the basis of the monetary system of all the countries concerned, he will inform the Government of the United States of America that it is not in the best interests of international trade for the present position of War debts to continue; and will he make an offer to pay the American Government in goods and services and, failing this offer being accepted, inform them that no further payments can be made under the present arrangement?

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): I do not think that I can usefully make any further statement in regard to the British War Debt.

Mr. CRAVEN-ELLIS: Have the Government any intention of making any offer in the near future to America?

Mr. CHAMBERLAIN: I cannot add anything to what I have said.

NORTHERN IRELAND (EXCISEABLE LIQUORS).

Mr. McKEAG (for Mr. HOLDS-WORTH): 20.
asked the Chancellor of the Exchequer the number of proof gallons of spirits, bulk and standard barrels of beer, and gallons of wine retained for consumption in Northern Ireland in the calendar year 1933, and the estimated revenue therein chargeable against Northern Ireland?

Mr. HORE-BELISHA: As the answer involves a table of figures, I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.

Following is the answer:

Approximate quantities of Spirits, Beer and Wine, retained for consumption in Northern Ireland during the calendar year 1933, and estimated revenue attributable thereto.


Article.
Approximate quantity retained for consumption.
Estimated attributable revenue.




£


Spirits
Proof gallons. 231,000
813,000


Beer
Standard barrels 145,000 Bulk barrels 183,000
592,000


Wine
Gallons 251,000
75,000

INCOME TAX PAYERS.

Mr. MITCHESON: 21.
asked the Chancellor of the Exchequer whether he can furnish an estimate of the number of persons assessed to Income Tax in respect of the year just ended and how many of those assessed were relieved of any payment of Income Tax as a result of the various allowances?

Mr. HORE-BELISHA: My hon. Friend will find figures for the year 1932–33 in Table 43 on page 66 of the recently published 76th Annual Report of the Commissioners of Inland Revenue (Command Paper 4456). The corresponding figures for the year 1933–34 will not be available for some time, but it is not expected that they will show any considerable variation from the estimated figures for the year 1932–33.

Oral Answers to Questions — MONETARY SYSTEM.

Mr. CRAVEN-ELLIS: 22.
asked the Chancellor of the Exchequer if his attention has been drawn to an appeal for an immediate investigation by Parliament of the fundamental principles which should govern our monetary system; and can he state what action he proposes to take thereon?

Mr. CHAMBERLAIN: I would refer to the answer given on the 11th April by the Financial Secretary to the hon. and gallant Member for Ardwick (Captain Fuller).

Mr. CRAVEN-ELLIS: Does my right hon. Friend appreciate that the whole world is looking to Great Britain to bring
about a settlement of monetary policy; and, if a Parliamentary Committee is not acceptable, will he call representatives of the British Empire together to discuss this question?

Mr. CHAMBERLAIN: There does not appear to be any question on which the whole world does not look to Great Britain.

Mr. CRAVEN-ELLIS: Having regard to the fact that foreign exchanges are so involved and upset and are interfering with international trade, is it not essential that we should have a settlement of this monetary question?

Mr. BOOTHBY: Does not the right hon. Gentleman think that his present policy is very satisfactory to all concerned?

Oral Answers to Questions — EXPIRING LAWS CONTINUANCE BILL.

Mr. HENDERSON STEWART: 24.
asked the Financial Secretary to the Treasury whether he proposes to arrange for the setting up of a Select Committee to consider the Acts to be continued in the next Expiring Laws Continuance Bill?

Mr. HORE-BELISHA: I have carefully considered whether any useful purpose would be served by an inquiry by a Select Committee this year. When a committee was first appointed for this purpose in 1922 the number of Acts scheduled to the Bill was 46. The number of Acts continued by last year's Expiring Laws Continuance Act had fallen to 13, and I find that with one exception, an Act of 1930, they had all been under review by the Select Committee of 1931. As far as I can see at present the number to be included in this year's Bill will again be only 13 and with the exception of two—both passed as recently as 1930—all of them came under review in 1931. In these circumstances I do not think that any further inquiry is called for at the present time.

Oral Answers to Questions — OLD AGE PENSIONS.

Brigadier-General NATION: 25.
asked the Financial Secretary to the Treasury if he will consider the introduction of legislation whereby persons in the infirm
wards of public assistance institutions shall not be disqualified from the receipt of their old age pension by reason of such residence?

Mr. HORE-BELISHA: I am afraid I cannot give any undertaking that the Government will introduce legislation on this subject.

Brigadier-General NATION: Does not my hon. Friend think that this is a rather mean policy for the Government to adopt towards a small section of the community which is suffering from the greatest of human afflictions?

Mr. HORE-BELISHA: No; I think I could explain to my hon. and gallant Friend that that is not the case, but to do so would involve a rather long recital of the law and the present practice.

Mr. PIKE: Does the hon. Gentleman realise that many of these persons are living in, one room at rentals exceeding 50 per cent. of their total income, and that, after living in one of these institutions for a month or so, they are totally unable to pay the debts which they have incurred as the result of their rooms being kept for them while they are in an institution?

Mr. HORE-BELISHA: The law already provides that a person who enters a Poor Law institution for medical or surgical treatment shall not be subject to disqualification so long as he continues to require such treatment.

Oral Answers to Questions — AGRICULTURE.

HAMS AND BACON (SUPPLY SITUATION).

Mr. LEONARD: 26.
asked the Minister of Agriculture whether he has considered a protest sent to him from the Scottish Provision Trade Association at the scarcity of hams in this country, while the world's supply is abundant; the resultant increase in British prices due to the Government's import restrictions; if he accepts the estimate contained in the protest that the over price which will be paid to foreign producers by the consumers of ham and bacon in this country in 1934 will amount to £12,000,000; and what steps he proposes to take?

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): I have been asked to reply. My right
hon. Friend has received representations from the Scottish Provision Trade Association in respect of an alleged shortage of hams in this country, and he has asked the Market Supply Committee to examine the supply situation, and to give advice as to the steps which ought, in the opinion of the committee, to be taken to remedy any shortage which may be found to exist. My right hon. Friend is aware of the rise in prices of bacon and hams, but he would hesitate at this stage to accept figures based on estimates of bacon prices for the whole of the year 1934.

Mr. LEONARD: Is there any contemplated action to deal with the incidence of this matter on persons in the curing and kindred trades?

Dr. BURGIN: Yes, that will be taken into account by the Market Supply Committee.

EGGS (PRICES).

Mr. LENNOX-BOYD: 28.
asked the Minister of Agriculture whether he can give those counties in which new-laid eggs are now being sold at 6d. per dozen?

Dr. BURGIN: I regret I am unable to give the information asked for by my hon. Friend. Prices as low as 6d. per dozen and in one instance 5½d. have recently been quoted in the trade Press in respect of certain markets which, however, for the most part are small and far from the main consuming centres and are not reported by the Ministry. The average price of home-produced eggs reported by the Ministry's market reporters from 29 representative country markets in England and Wales range from 7d. to 1s. per dozen this week.

Mr. LENNOX-BOYD: Is it not a fact that in many parts of the country some hundreds of smallholders in this trade are at the moment faced with ruin, and can the Government take some action to put off such a contingency?

Dr. BURGIN: I am asked about the price of eggs, and I have given the answer. I have a list of all the markets where these prices were obtained.

Mr. MABANE: Are those retail or wholesale prices?

Mr. CHARLES WILLIAMS: Can my hon. Friend give the markets where the price was 1s. a dozen?

Dr. BURGIN: Not without notice, because this foolscap list of names does not subdivide the markets according to price.

Mr. MABANE: Can the hon. Gentleman give an answer to my question?

MEAT IMPOST RESTRICTIONS.

Mr. LENNOX-BOYD: 37.
asked the President of the Board of Trade if he can make any statement as to the negotiations which are now proceeding with a view to re-adjusting the proportions of boned beef imported from foreign countries?

Dr. BURGIN: I would refer my hon. Friend to the answer given to the hon. Member for East Dorset (Mr. Hall-Caine) on the 5th February.

Dr. HOWITT: 41.
asked the Secretary of State for Dominion Affairs whether in view of the impending termination of the agreement with regard to meat reached at Ottawa, he will consider calling a conference of representatives of the Dominions with a view to reaching a new arrangement satisfactory to all parties?

The Secretary of STATE for DOMINION AFFAIRS (Mr. J. H. Thomas): The situation as regards meat is under consideration, and I am not in a position to make any statement at present.

Mr. PERKINS: In the negotiations with the Australian Government will the right hon. Gentleman bear in mind the fact that the Australian Government have increased their duties against British manufactured goods in five cases?

Mr. THOMAS: But they have reduced them in 149 cases.

Lieut.-Colonel HENEAGE (for Mr. HERBERT WILLIAMS): 27.
asked the Minister of Agriculture whether his attention has been drawn to the fact that the imports of beef in the March quarter of this year were higher than in the corresponding quarters of each of the last three years and, under these circumstances, can he state when the restriction of the imports of beef will commence to operate?

Dr. BURGIN: Imports of beef from foreign sources in the March quarter of this year were lower than in the corresponding quarter of 1932 and 1933 by about 7 per cent. and 2 per cent., respectively.
Imports from all sources were about 5 per cent. lower than in the corresponding quarter of 1931, and 3 per cent. and 7 per cent. higher than in the corresponding quarter of 1932 and 1933, respectively. The increases in imports of beef from all sources compared with the corresponding quarter of 1932 and 1933, are entirely attributable to larger supplies from Empire countries. With regard to the last part of the question, I would refer my hon. Friend to the reply given to him by my right hon. Friend the Minister of Agriculture and Fisheries on 19th March.

Lieut-Colonel HENEAGE: Can the hon. Gentleman say whether it is impossible to hasten the time when these restrictions will be brought into force?

Dr. BURGIN: My hon. Friend knows better than almost anybody else that the agreements in respect to beef run out in the summer of this year.

Mr. PALING: How long does the hon. Gentleman think it will be before we stop imports altogether?

Vice-Admiral TAYLOR: Would it not be better to restrict foreign imports in the interests of the Dominions?

Oral Answers to Questions — ELECTRICITY SUPPLY, WIMBLEDON.

Mr. MITCHESON: 29.
asked the Minister of Transport the date on which the Central Electricity Board came to a special agreement with the Wimbledon Corporation Electricity Department; what were the terms of the agreement; and by how much a year the revenue of the Central Electricity Board will suffer by this arrangement as compared with the revenue obtained if Wimbledon had been supplied from the grid at tariff rate?

Lieut.-Colonel HEADLAM: I am informed that the arrangement referred to was concluded between the London and Home Counties Joint Electricity Authority and the Wimbledon Corporation on 1st July, 1933. The alternative method by which Wimbledon Corporation might have been brought into association with the national system would not have been a supply at tariff rates, but the selection of the Wimbledon station. I understand
that the London Joint Authority and the Central Electricity Board are satisfied that the arrangement concluded is more advantageous to the grid and the authorised undertakers receiving a supply from it than the alternative method mentioned.

Mr. MITCHESON: Is the hon. and gallant Gentleman satisfied that the price paid by the Wimbledon Council is more than the actual cost of consumption or less than the cost to the Central Electricity Board?

Lieut.-Colonel HEADLAM: The arrangement made will not involve any other undertakers in extra expense.

Oral Answers to Questions — TRADE AND COMMERCE.

BULBS.

Dr. HOWITT: 33.
asked the President of the Board of Trade whether his attention has been called to the fact that the imports of bulbs from the Netherlands increased in volume from 16,000,000 in the first two months of 1932 to 41,000,000 in the first two months of 1934; and whether he will take that fact into consideration when coming to any trade agreement with that country?

Dr. BURGIN: Yes, Sir. All relevant facts will be borne in mind in the negotiations with the Netherlands Government for a trade agreement.

CARPETS.

Mr. PERKINS: 34.
asked the President of the Board of Trade whether he is aware that the retained imports of carpets for the first two months of 1934, as compared with a similar period for 1933, have increased from 364,013 square yards to 628,690 square yards; and what action it is proposed to take in the interests of this branch of home industry?

Dr. BURGIN: I would refer my hon. Friend to the reply given on the 17th April to the hon. and gallant Member for Islington, North (Colonel Goodman).

Mr. PERKINS: Is my hon. Friend satisfied that it would be impossible to produce these carpets in this country?

Dr. BURGIN: Well, I am satisfied that these imports come to us because somebody thinks it is worth while to buy them. As far as I know, the larger percentage of these carpets come from India.

Mr. PERKINS: But could they not be produced in this country?

Mr. PIKE: Will the hon. Gentleman say whether the future policy of the Government will be based on the original sentence of his reply?

BUTTONS AND STUDS.

Mr. PERKINS: 35.
asked the President of the Board of Trade whether he is aware that the retained imports of buttons and studs for the first two months of 1934, as compared with a similar period of 1933, have increased from 1,766,646 gross to 2,936,976 gross; and whether he will take steps to reduce the imports of these articles?

Dr. BURGIN: I am aware of the facts to which my hon. Friend draws attention. The question of any increase in the duty payable on these goods is a matter for the Import Duties Advisory Committee in the first instance.

Oral Answers to Questions — SCOTLAND (D. GUILD'S FUND, ABERDEEN).

Mr. BURNETT: 38.
asked the Secretary of State for Scotland whether he is aware that the Educational Endowments Commissioners have submitted a scheme to remove from the incorporated trades of Aberdeen the control of Dr. Guild's fund for providing bursaries at Aberdeen University for the sons of poor craftsmen; and when a decision may be expected?

The UNDER-SECRETARY of STATE for SCOTLAND (Mr. Skelton): I am informed that the Commissioners have prepared a draft of a scheme for this endowment and have published it in terms of Section 18 of the Educational Endowments (Scotland) Act, 1928. They have now to consider the objections which have been or may still be submitted to them. They may hold an inquiry if they think that necessary. Thereafter, they may frame a scheme in such form as they think expedient and submit it to the Department. Until a scheme is so submitted, the Department have no locus in the matter.

Mr. MACQUISTEN: Is there no way of putting an end to this kind of thing? People's wills are altered and they play like pigs in clover with the bequests made by innumerable people. They are doing a fearful mischief.

Oral Answers to Questions — KENYA (NATIVE RESERVES).

Mr. DAGGAR: 39.
asked the Secretary of State for the Colonies what instructions have been given to the Economic Development Committee set up in Kenya Colony as to the lines it shall follow in investigating possibilities of developing native reserves?

The SECRETARY of STATE for the COLONIES (Sir Philip Cunliffe-Lister): The committee is one appointed by the Governor of Kenya. I am not aware that the committee has received any instructions other than its terms of reference, which I understand are as follow:
to examine and advise upon any proposals directed towards the improvement of the Colony's balance of trade and towards the maintenance and development of its agricultural and industrial resources.

Oral Answers to Questions — NATIONAL GALLERY, TRAFALGAR SQUARE.

Mr. POTTER: 40.
asked the First Commissioner of Works whether his attention has been called to the untidy appearance of the fire-prevention space between the west side of the National Gallery and Messrs. Hampton's premises; and whether he will consider designing a simple masking architectural scheme to bring this space into harmony with the Trafalgar Square buildings while preserving the open space as a fire-guard for the National Gallery?

The FIRST COMMISSIONER of WORKS (Mr. Ormsby-Gore): I will consider my hon. Friend's suggestion and communicate with him in due course.

Oral Answers to Questions — NAVIGABLE WATERS (OIL POLLUTION).

Mr. DAVID GRENFELL: 42.
asked the Secretary of State for Foreign Affairs whether he will take steps, with a view to the appointment by the League of Nations of a special commission, to consider international action to bring the adoption of oil separators on board all oil-driven and oil-carrying ships sailing under the flags of all nations?

The LORD PRIVY SEAL (Mr. Eden): As my right hon. Friend stated in reply to my hon. Friend the Member for Woodbridge (Mr. Ross Taylor) on the 22nd March, steps are being taken to
inform the chief maritime Powers of the intention of His Majesty's Government to raise the question of oil pollution at the next meeting of the Assembly of the League of Nations. The form in which the question will be raised is under consideration and the hon. Member's suggestion will be borne in mind.

Oral Answers to Questions — GERMANY (AEMAMENTS EXPENDITURE).

Brigadier-General SPEARS: 43.
asked the Secretary of State for Foreign Affairs whether, now that he has received a reply from the German Government with regard to the increased German expenditure on armaments, he can make a statement as to its bearing on the Treaty of Versailles; and if he intends to take any action?

Mr. EDEN: No, Sir. I am unable at present to make any further statement on the subject.

Brigadier-General SPEARS: Arising out of that, may I ask when an answer can be given?

Mr. EDEN: I am afraid that I cannot add to the terms of my reply.

Mr. THORNE: Is it not as plain to the hon. Gentleman as it is to all of us that Germany is spending a tremendous amount on armaments of every kind?

Vice-Admiral TAYLOR: How are you going to stop them?

Oral Answers to Questions — RIVERS (POLLUTION).

Mr. D. GRENFELL: 14.
asked the Minister of Health whether he is prepared to sanction the payment by local authorities of contributions towards the expenses of the Bristol Channel Pollution Advisory Council, in view of the circular which he sent to all local authorities urging them to set up advisory committees with the object of bringing about improvement in the condition of water supplies?

Mr. SHAKESPEARE: Local authorities have no powers of contributing to the expenses of a body such as that mentioned by the hon. Member. The provisions of the Local Authorities (Expenses) Act, 1887, which enable my right hon. Friend in special circumstances to
sanction expenditure, are not appropriate to the case.

Mr. GRENFELL: Is it not the case that the hon. Gentleman's own Department circularised local authorities advising them to set up these committees, and, as the committees have been set up, is it not fair that they should be paid?

Mr. SHAKESPEARE: The hon. Member is under a misapprehension. The committees which we advised should be set up are the committees dealing with supplies of water. The question he puts concerns sea water, fish and fishermen.

Mr. GRENFELL: But there is a definite circular from the hon. Gentleman's Department urging that committees should be set up to deal with this question of pollution.

Mr. D. GRENFELL: 15.
asked the Minister of Health whether he is prepared to exercise the power conferred on him by the Land Drainage Act, 1920, of establishing joint committees for preventing pollution of rivers; and, in particular, whether he will take action in respect of one or more catchment areas in South Wales where some of the rivers are heavily polluted?

Mr. SHAKESPEARE: My right hon. Friend has not received any application from any county council or county borough council for the appointment of a joint committee in South Wales. He is prepared to consider any representations which may be made to him for the appointment of such a committee.

Oral Answers to Questions — JAPAN AND CHINA.

Mr. HARCOURT JOHNSTONE (by Private Notice): asked the Secretary of State for Foreign Affairs whether he can make any statement on the verbal declaration made yesterday by the Japanese Foreign Office as to the relations of foreign countries with China?

The SECRETARY of STATE for FOREIGN AFFAIRS (Sir John Simon): All I can say at present is that the statement appears to have been made orally by a Press officer of the Japanese Foreign Office. There are somewhat discrepant versions of what was said, and I have nothing to show whether it was an authoritative declaration. I must await further
information before I can say anything further on the subject.

Mr. JOHNSTONE: Has the right hon. Gentleman had no telegrams from His Majesty's Ambassador at Tokio?

Sir J. SIMON: The statement, as the hon. Gentleman knows, appeared only yesterday, and I prefer not to say anything further until I have information upon which I can make a statement.

BUSINESS OF THE HOUSE.

Mr. ATTLEE (by Private Notice) asked the Prime Minister what business it was proposed to take next week?

The PRIME MINISTER (Mr. Ramsay MacDonald): Monday, Tuesday and Wednesday: Unemployment Bill (Committee stage), 12th, 13th and 14th allotted days.
Thursday: Report stage of the Budget resolutions.
Friday: Private Members' Bills.

On any day, if there is time, other Orders may be taken.

BILLS REPORTED.

MINISTRY OF HEALTH PROVISIONAL ORDER (BLACKBURN) BILL.

Reported, with Amendments [Provisional Order confirmed]; Report to lie upon the Table.

Bill, as amended, to be considered To-morrow.

MINISTRY OF HEALTH PROVISIONAL ORDER (SHIPLEY) BILL.

Reported, without Amendment [Provisional Order confirmed]; Report to lie upon the Table.

Bill to be read the Third time Tomorrow.

SOUTHERN RAILWAY BILL.

Reported, with Amendments; Report to lie upon the Table and to be printed.

MARRIAGE ACT (1886) AND FOREIGN MARRIAGE ACT (1892) AMENDMENT BILL.

Lords Amendments to be considered upon Friday, 27th April.

SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE A.

Mr. William Nicholson reported from the Committee of Selection; That they had added the following Ten Members to Standing Committee A (in respect of the Incitement to Disaffection Bill): Mr. Vyvyan Adams, the Attorney-General, Mr. Duff Cooper, Mr. Lawson, Mr. Oswald Lewis, Mr. Lyons, Mr. Mallalieu, Mr. Maxton, Mr. William Morrison, and the Solicitor-General.

Report to lie upon the Table.

MESSAGE FROM THE LORDS.

That they have passed a Bill, intituled, "An Act to safeguard the independence of the Judiciary." [Judiciary (Safeguarding) Bill [Lords.]

Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

Orders of the Day — WAYS AND MEANS.

Considered in Committee [Progress, 18th April].

[Sir DENNIS HERBERT in the Chair.]

AMENDMENT OF LAW.

Question again proposed,
That it is expedient to amend the law relating to National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with finance."—[Mr. Chamberlain.]

3.23 p.m.

Mr. DAVID GRENFELL: I am under some disadvantage in taking part in this Debate on account of other engagements having kept me away from the House when the Budget was introduced, and I shall have to refer to the Chancellor's statement only as I heard it on the wireless on Tuesday evening. Perhaps I should say here that, while I disagree with the conclusions and the claims made by the right hon. Gentleman that evening, I heartily congratulate him on his speech. If I have occasion to refer to anything which he said, my references will be to the speech he made on the wireless on the evening of the Budget speech.
My intention is to examine the Budget as a whole, rather than to criticise the various detailed points. I will call attention to the chief claim made by the right hon. Gentleman, in which I thought he was under some obligation to his late colleague Lord Snowden. He very skilfully and readily threw the responsibility for the cuts in unemployment benefit on to his former colleague, but he gave him no credit for the restoration of the cuts. Lord Snowden certainly had an influence and played a very great part in the arrangement which made those cuts possible. At that time we condemned the cuts, and we still condemn them. It is not good enough for the right hon. Gentleman to divest himself of responsibility for them. I do not say that that was his intention in his very pleasant and entertaining speech, but he gave that impression to some of those who listened to him.
The right hon. Gentleman claims personal credit for the restoration of the
cuts. Those of us who have watched the Budgets since 1931 do not share that satisfaction. The condition in which we now find ourselves shows that there was no occasion for the cuts. All the details that were given in the Financial Statement and in the speeches made this week have shown that the country could have carried on quite comfortably without any concession being required from the unemployed people. We are not grateful for the present show of generosity, and we more strongly than ever condemn the past action of the Government. The Government do not expect us to share in the satisfaction and to agree to bless this Budget on that ground.
The main ground of the condemnation is that the restoration is still only a sham. It is very partial indeed, and we are far from being back halfway to the 1930 level. Nobody knows that as well as the right hon. Gentleman, who makes no mistake in his actuarial assessments. There is no incapacity on his part to appraise definitely and exactly the effect of all that he does. The right hon. Gentleman does not show the same keenness when he comes to explain those implications to the public outside this House. The right hon. Gentleman will claim that half those cuts have been restored. The cuts to the unemployed are a very small proportion of the restoration of the sacrifices made by the unemployed people in the last two and a-half or three years.
There is another point which the right hon. Gentleman omits, and to which I have not heard reference by any hon. Member. The cuts have been restored, but not at the expense of the right hon. Gentleman or of the Treasury. He gave no assistance to the Committee in showing how those cuts are to be provided. I shall fulfil that omission, if I am allowed, by reminding the right hon. Gentleman that in the Economy Act of 1931 provision was made not only to reduce standard benefit and to impose a means test, which was a heavier sacrifice still upon the unemployed, but at the same time and in the same Measure provision was made for increasing the normal contributions made by men in employment towards the Unemployment Fund. The Committee will remember that every person in this country paid, either by direct contribution or through his employer or the State, a weekly sum of 1s. 10½d. An addition was made to that of 33⅓ per cent., by which
the contribution was raised to 2s. 6d. per person per week. The right hon. Gentleman claimed that the State made its contribution and paid 10d. out of the 2s. 6d., but he knows quite well that the increase of contribution has been mainly paid by the workpeople.
When we examine the figures more closely, we find that not only are those contributions thrown back upon the workers in industry—the contributions of the employers as well as of the men themselves—but, even though the employers have been called upon to make an additional contribution, they have been given, in the De-rating Act, more than has been required of them by way of contribution to this three-party scheme. Therefore, sufficient money has been required front industry in advance, mainly at the expense of the workpeople, to pay the additional benefits and restore these cuts, without requiring one halfpenny more from the Treasury. The right hon. Gentleman will not deny that the additional contributions required in 1931 amount in the aggregate to more than he is now restoring in cuts and in standard benefit. We are not, therefore, grateful to him for having nominally restored these cuts in his Budget. The figures are there, but he knows quite well that he will not be required to find the money, because it has already been provided in advance, and, in the Unemployment Bill which is now before the House, the provision is still maintained which will guarantee that, from the Act of 1931, unaltered, there will be an adequate sum to meet all these claims; and the higher level of benefit and the restoration of cuts is, therefore, simply a consequence of the Act of 1931. Therefore, we do not thank the right hon. Gentleman for his generosity in that matter. The standard rates of benefit will be paid from the contributions; the transitional benefit will be paid from another source.
The right hon. Gentleman has said that the restoration of the cuts will cost less than £5,000,000, but, in the same Budget, he is reducing the Income Tax by 6d. in the £, and that works out at a total of £24,000,000 a year. The 3,500,000 people who are paying Income Tax are to receive a gift varying in individual cases, of no less than £24,000,000 a year in all. There was great satisfaction in certain
quarters in the city, and I thought that the one thing that jarred on the Chancellor's speech on the wireless was the echo in the concluding report by the announcer, who said that, when the news of the Budget was received in the city, there was great jollification. They drank the Chancellor's health, they went to the Stock Exchange, and they speedily entered into an orgy of speculation. When the doors of the Stock Exchange were closed, they carried on their operations in the street, and adjourned to the public-houses to complete their bargains. The Chancellor came along with a more melodious voice, and tried to dispel the echoes of the roystering crowd, but the jubilation in the city rather off-set the claims that we heard in the House as to sympathy with the unemployed, and the consideration and care of the Government for these unfortunate people.
We say that this reduction in Income Tax was an act of unnecessary kindness and of misdirected generosity—that the Income Tax payers in this country stood in no need of immediate relief, and that it was not sound business policy to use the surplus for that purpose while at the same time a very large number of people coming almost within the Income Tax class, and even in the lowest ranks among the Income Tax payers themselves, are overburdened with family responsibilities and other cares. In that respect the allowances were reduced by the Economy Act of 1931, and a much more effective way of helping these people, who deserve help and relief, would have been to raise these allowances to the level at which they stood in 1929.

Mr. MACQUISTEN: Does not the hon. Gentleman realise that it is not the Chancellor of the Exchequer who is relieving the Income Tax payer, but that it is the Income Tax payer who relieves the Chancellor by paying money to him?

Mr. GRENFELL: These concessions have been made by the Chancellor to people who do not require them. People with very large incomes, amounting to hundreds of thousands a year, have received this relief, and will pocket thousands of pounds during the next year because the Chancellor has reduced the Income Tax by 6d. in the £.

Mr. MACQUISTEN: It is their own money, not the Chancellor's.

Mr. GRENFELL: Then came the concession to motor car owners. I believe that the Chancellor was guilty of a grave dereliction of responsibility and duty when he gave relief to owners of motor cars and was not prepared to give relief to the heads of families. Those who are responsible for children and family life are not being assisted by the right hon. Gentleman, but those who possess motor cars have received very handsome assistance indeed. This, apparently, is the way in which the Chancellor is going to assist the home market. One point that I noticed in his speech was that his policy was to strengthen the home market. We all agree with him in that very laudable desire; it is essential, as has been observed by more than one speaker in the House in the last few days. But how is he going to strengthen the home market? He had £24,000,000 which he could have used for that purpose, but he has given it to his rich Income Tax-paying friends, who will start at once an orgy of speculation and all kinds of anticipatory plans, not to increase production, not to increase consumption at home, but to enrich themselves still further at the expense of the community in all kinds of unnecessary and futile speculation.
A very great opportunity, as I think, has been lost to this House and to the country. We share with the right hon. Gentleman and everyone else in the House very great pride in the willingness and readiness of our people to do anything that is required to pull this country through. The whole of our people are, in a steady, quiet, non-effusive way, very patriotic. The right hon. Gentleman ought to have appealed to that great innate patriotism of our people, and to have lent the assistance of his experience and that of those who work with him in taking advantage of this great opportunity. It is an opportunity that has come to the Chancellor of the Exchequer year by year to assist in the redistribution of our national wealth. The hon. and learned Member for Argyllshire (Mr. Macquisten) says that this wealth belongs to individuals, that it belongs to each individual person. We agree that for this purpose the nation is a collection of individuals. They occupy all kinds of varying situations in life. But we all live together, we are all part of one national community, and we all have our obligations to that community as well as
to ourselves. The Chancellor of the Exchequer exercises an authority long ago given to him and to Parliament to make levy upon the incomes of individuals, with the fundamental recognition that the money of individuals belongs to the State and is made by the State—by the community. That is the recognition, and, whenever the Chancellor of the Exchequer makes levy upon a person's income, that person has to obey and deliver his income for the service of the State. That is the opportunity which comes year by year in connection with the national stock-taking which is carried on under the supervision of the Chancellor of the Exchequer and his advisers.
That national stocktaking for generations now has been used to distribute our national income to the advantage of sections of the community and to the ultimate advantage of the whole. The Chancellor has this year again required to collect a very large sum of money in national revenue. Year after year for the last 15 years or so we have collected about £800,000,000 through the instrumentality of the Budget, and we have spent it for various beneficent purposes of the State. The Chancellor of the Exchequer this year again will collect almost the same amount. He shifts the burden a bit. There is less of one kind of taxation and more of another. While he reduces the Income Tax he increases the Customs Duties. But for the next year, as in previous years, we shall require to raise a very large sum of money and the responsibility falls upon us of deciding how the money shall be spent. The Chancellor is following the precedents of previous Chancellors. He is collecting 20 per cent. of the national income and spending it for the advantage of the State without interference by individuals or by any vested interest. The purpose of the expenditure is well within the control of the House. It comes almost daily under the supervision of the House and gains the approval of the House from time to time. But there is this opportunity which allows us to strike out in fresh directions.
It has been said that the money collected for the various national purposes should be required from the people who are most capable of bearing the burden—that the burden should be put upon the strongest shoulders. Lord Snowden, with the directness which
belongs to him alone, said, "When we want money we will go where money is." That is good Yorkshire English, and it is a pity that Lord Snowden fell away from his faith and went somewhere else when money was required. But the Chancellor, and all other Chancellors, must in the ultimate resort go where the money is. You cannot get money where it is not. If the peculiar system in which we live permits individuals who are part of this great community to accumulate large fortunes and to derive large incomes year by year, the Chancellor must go to those people and require a contribution from them according to their means.
The Chancellor of the Exchequer and Lord Snowden were colleagues and were jointly responsible for having made these unjust demands. Lord Snowden was unfaithful to his life's professions. I do not think the right hon. Gentleman has ever committed himself to Lord Snowden's view that he should search for the money in that way, but I believe that he would agree with me that it is the business of the individual to pay cheerfully when the nation requires the money for the nation's purposes. He joined Lord Snowden and the others in the conspiracy to cheat the unemployed people. They have taken from the unemployed, by means of the cuts in benefit and the applications of the means test, no less than £60,000,000 since November, 1931, an enormous contribution from people living on the verge of starvation, not going to people who have money to spare but to people having no money to spare, not going where money is but where money is not to extract the last farthing they could from the slender resources of those people. We must not delude ourselves. We are not removing the means test. We are not replacing the money which we demanded from the unemployed people.
The right hon. Gentleman said he could see that we were in for a better time. It had been a Bleak House, but now we were facing Great Expectations. Of all the miserable helpless people in life that I have met, the most helpless are; those with great expectations, people who have a rich uncle in some distant part whose present comfort in life they begrudge and whose early demise they anticipate with satisfaction. They cannot come down to any efforts of work for themselves. They rely upon this bolt from the blue, this
fortune which is to come from the demise of some relative who has given them some token of affection or confidence. The House is now asked to rejoice because we have great expeceations. Great things are to come to us if we wait and if we have faith in the Government. From whom are these expectations due? Is there any sign anywhere of improvement in world trade? Search wherever you like and you will find none. It is hardly any greater than it was; it is less than 50 per cent. of what it was in 1929. He would be a very sanguine person who, viewing the world, can get any solid satisfaction from viewing trade prospects.
The Chancellor appeared to be satisfied, and we should like to know the basis of his satisfaction. He does not work alone in this. He is one of a triumvirate who are governing the destinies of the country. It is not Cabinet Government that we have; it is Government by three very important and capable persons each in his own Department, the Chancellor occupying the chief position. The President of the Board of Trade carries on very important negotiations and plays a very fundamental part in this task of strengthening the home market. There is the Chancellor of the Exchequer playing one part, the President of the Board of Trade playing another, and the Minister of Agriculture playing his part, too. The trouble about these people is that they work in different ways their wonders to perform. There is no common policy. There is no plan. Indeed, they often behave in a fashion entirely contradictory to each other's efforts, as if they envied each other the prospects of individual success. The three people who do this work give evidence day by day of a lack of cohesion and of national planning in all that they do.
The Chancellor of the Exchequer is in control of the money machine, which he did not construct but which he operates with his own authority and that of the Bank of England. We were told once by a famous financier that the Treasury and the Bank of England can best be represented by those two mythical personages Tweedledum and Tweedledee. This alliance between the Bank of England and the Treasury is responsible for great wide-reaching operations. There is the Exchange Equalisation Fund of
£350,000,000 which some one can afford to play with and there are most disquieting reports about the operations of the fund, not merely in the House but outside. This concession in respect of motor cars is intended to increase the export of cars. What is the use of selling motor cars to buy idle, useless gold which will be locked up immediately on its arrival in this country? There were over £200,000,000 worth of retained imports of gold last year which, as far as the Committee knows, served no practical purpose. That is the kind of operation which has been carried on by the right hon. Gentleman. He has paid a very big price indeed for the control of the money machine and for the attempt to balance the trade and exchanges in this country.
What is really the aim of the Government? What is the present purpose of the Government? What have they in view? Is the right hon. Gentleman prepared to tell the Committee? He has the responsibility of making the poor Income Taxpayers pay their Income Tax regularly, and he chases everybody in the country more and more, and imposes taxation, which becomes heavier and heavier, upon the poor people of this country. What is the end and aim of all this activity for which he is responsible? Let us go back to the doctor's mandate. We heard a good deal of it. We are entitled to know what has become of this mandate. What is the doctor's mandate to-day? We seen the patient in regard to whom there has been a wrong diagnosis, and we must attempt to treat him in the absence of skilled attention by the doctor. We find that there is no attempt to make a right diagnosis and to give information on the treatment to be prescribed. The whole Committee will agree that what this country is suffering from at the present time is a kind of financial blood pressure. There is no condition of anaemia. The country has a surfeit of wealth, of money resources which it cannot use or circulate. There is weak circulation, congestion, and financial blood pressure which requires a special form of treatment.
The right hon. Gentleman comes before the Committee and says, "I recognise that the patient is still not perfectly fit.
We have not discharged our obligations as doctors, but I have prescribed further tests of homoeopathic treatment." He says that there is too much money. There are savings which cannot be invested, and the right hon. Gentleman says, "I will add to these idle savings by piling up still further idle savings. I will give £24,000,000 to people who do not need it for immediate use, and who can only make use of it by looking for investments at home and abroad from which they can get still further profits." If the diagnosis is as I have described, and we are suffering from too much money, is it not the duty of the Government to try and deal with the matter in a different way. Instead of piling up still greater reserves of capital, the duty of the Chancellor of the Exchequer, having taken the nation's money, is to see that it is spent in a way which will stimulate better production and make for better consumption. The rich Income Tax payers whom he has helped will not help him very much in this regard. It is the great masses of the people who will help him to increase the purchasing power, and, incidentally, the home market. Fifty million consumers are worth 10 times as much 5,000,000 rich people. The right hon. Gentleman gives assistance to 5,000,000 people, and neglects to a very great extent the 50,000,000 people who could build up for him a very strong, and sustain a very effective, home market.
The business of the Chancellor of the Exchequer is to help the nation to use up this surplus. He should take a direct hand in this matter. It is not safe for the Chancellor of the Exchequer to allow large volumes of savings to be piled up in the form of bank deposits in this country without taking in hand the business of helping the consumers and putting that money into circulation. Money spent wisely is the highest form of economy. Money hoarded at a time of excess savings and when there is no possibility for further investments on useful lines is not economic but is the worst form of profligacy. There is no need in this country at the present time for more savings. If we were able to give back the whole of the Income Tax to people who already enjoy a standard of living as high as they can with satisfaction maintain,
with their personal wants reasonably supplied, if we were able to give the whole of the £220,000,000 in Income Tax back to those people, it would not benefit them or the country one bit unless they brought the £220,000,000 into play by passing it over the counters in the shops of this country, thus adding to the purchasing and consuming power of the country. The Chancellor of the Exchequer has used his opportunity in the wrong way by adding to the unnecessary spending power of the people who will not spend the money. The people who would spend but have not the spending power have been left out.
The Chancellor of the Exchequer should not pander to the selfishness of those people who celebrated his Budget in the way they did in the City of London. There are large numbers of people in the City of London who play no useful part in the welfare of the nation. They are parasites upon the community, and a pest and a menace to the community at all times. A perusal of the press reports which cater for that particular class of people would convince impartial persons in this country that the Budget surplus has not been put to a wise use in the interests of the nation, but has been given as a pretext for unwise and foolish speculation to large numbers of Income Tax payers who will have money which they are not capable of spending or which they do not know how to spend reasonably, and who will fall easy victims to the wiles of the Stock Exchange. There is another way in which the Chancellor of the Exchequer can help. Everyone realises that we have reached a point when there is no need for further difficulty in the production of commodities of all kinds. In the field of over-production, which is the daily care of the Minister of Agriculture and of the Chancellor of the Exchequer himself, the condition of glut which has fallen upon this country as well as upon the whole world, we must really try to build up a larger market and consuming power; a larger daily consumption of goods of all kinds which we are now capable of producing in such abundance.
This afternoon it was announced that the Prime Minister was going to set up a committee. We have heard committees ridiculed from time to time in this House, but I shall not ridicule the
setting up of any committee at any time to inquire into the problem of national reconstruction and of the resettlement of the people now living in a hopeless way day by day in our derelict areas. I have often thought that if I had power and influence in this country, I would pay attention, first of all, to those people who, from day to day, fail to find occupation for their hands and their minds. They are people who have the same right to live as ourselves, and to as full a life as we enjoy. We shall have failed if we allow those people by the hundreds of thousands to remain unoccupied and in a hopeless condition day by day. I would like the Chancellor of the Exchequer even now to do something He may be Chancellor of the Exchequer yet for two or three years. We do not begrudge him his position. As long as the National Government remain on that side of the House, he might as well be Chancellor of the Exchequer as anybody else. He has responsibilities towards our people who have suffered because of the maldistribution of wealth. There is wealth in abundance, but we have suffered because we have not yet been able to devise a political system which can make its distribution beneficial to-each and to all of us.
I would like to see the Chancellor using his surplus in this way. He will probably have £40,000,000 or £50,000,000 of surplus this year, unless he has very bad luck indeed. It is now too late, no-doubt, but, if it were possible, I would withdraw every penny of the concession to the Income Tax payers. I would assist the people in the lower stages of Income Tax payment. There are 3,500,000 people who pay Income Tax. There are an additional 4,500,000 people, more or less, who earn up to the Income Tax limit, but who are relieved by personal allowances. But of the 3,500,000 who pay Income Tax, there is a very considerable number indeed who cannot afford to pay it. I would relieve them by extending their allowances at least to the standard of 1931, but, having done that, I would give no further concession. I would spread the purchasing power and tax the rich so as to take away from those who have too much money in order to raise the general level and increase the general spending power of all classes in the community. There is a great need for reconstruction, to which, I hope, the
committee which was announced to-day will pay attention. I hope that that committee will examine many things—the question of land reclamation and land settlement, and pay their attention at once to the question of water supplies. Let them devise immediate plans for settling people on the land and for afforestation and rural regeneration, which must play a very large part in our future economy if foreign trade is to remain at its present low level.
I would like the surplus which is available, and which ought not to be paid away to rich people, to be spent upon the reconstruction of our national life. I would like an opportunity of employment to be given to every person in this country. In addition to these practical schemes for employment and reconstruction, I would immediately finance the raising of the school age to 16 for all children in all parts of the country. If I still had a surplus—and I have not lost sight of the figure; the Chancellor knows quite well that I am well within the figure to which I referred when I commenced this part of my speech—I would pay a pension to every aged person who would volunteer to give up his post in industry—a voluntary pension, which was the subject of discussion in this House some time ago. In promoting these schemes of national reconstruction, and with a wider distribution of national wealth, by thus casting our bread upon the waters it would return after many days. The result of such an effort on the part of the Government would mean the ultimate prosperity and the lasting contentment of our people.

4.4 p.m.

Sir ROBERT HORNE: The hon. Gentleman who has just spoken has made, if I may be allowed to say so, a most agreeable and genial speech, and I should dislike intensely to adopt an attitude of undue controversy. I would rather fasten upon a principle he laid down with which I heartily concur. Wise spending, he said, is the best form of economy; hoarding is waste. I think that the hon. Gentleman and I, if we sat down together with a sufficient space of time at our disposal, working out those principles, might not impossibly arrive at a common agreement. Bui I am not sure that our deliberations would touch very closely
the great problem with which we are faced this afternoon. The issue, after all, is the Budget, and the main difference between the hon. Member and myself is that he disagrees with the Budget while I, on the whole, agree with it. I can only express my point of view. I do not suggest that the fact that it in any way pleases me is a recommendation, but, at any rate, I can only express my own point of view, which I shall endeavour to do to the Committee in the course of the short speech I am going to make.
This Budget, I think, may very well be regarded, and ought to be regarded, as a notable one. It marks, as I think, the turning point in what, I am sure we all hope, is the end of a very critical epoch in our history. The period of decline has been beyond measure, depressing, and it is only now that we can recall without dismay how near we stood to the abyss. To-day our faces are, I think, once more turned upwards, and we are full, not merely of hope, but of confidence for the future. We should be fools if we did not at the same time realise that we have got a long way to climb and a very steep road to traverse before we reach the position which we previously held. But I am sure that impartial observers and the recorders of history in the future will say that this remarkable transformation, not less in our hearts than in our fortunes, is to be ascribed to the power and determination of the Government and the steadfastness of the British people.
The Chancellor of the Exchequer on Tuesday, with that lucidity to which we are now well accustomed, explained the new situation. In a speech of great sobriety, the very restraint of which at times partook of the character of eloquence, he expounded to us the figures which are the symbols of Britain's emergence from the morass of her difficulties. He presented a Budget in which is restored in full measure the unemployment benefit which obtained before the year 1931. [HON. MEMBERS: "He did not!"] I shall be corrected by the right hon. Gentleman if I am wrong, but there is restored the measure of benefit under the insurance scheme which existed prior to the cut of 1931. That is ordinarily, I believe, in common parlance described as restoring the cut—a phrase which does not sound to me either logical or cheerful, and rather reminds ma of a reopening of the gash which one's razor
made yesterday: but we all understand what is meant by the phrase, and therefore we can pass from that. In addition, the Budget gave back half of the reduction which had been made in the salaries paid by the State, and, at the same time, reduced the Income Tax by 6d., a sum which had been imposed in the year 1931 in order to relieve the critical situation in which the country then stood. I venture to say that that is an achievement upon which the Chancellor of the Exchequer and the country can be congratulated.
There are other things in the Budget which deserve some notice, but I shall refer only to one which, I gather, has incurred the displeasure of the hon. Member who has just sat down, namely, the reduction in motor taxation. Let me ask the Committee to believe that that is no attempt to grant any favour to any privileged persons in this country. The only object of this measure is to increase work and to obtain opportunities of markets which at the present time are denied. I have some personal interest in this matter for the reason that, as some hon. Members may remember, when I came back from a tour of the Dominions six years ago, I wrote a letter to the "Times" in which I urged that the taxation of motors according to their power should be entirely removed. I have seen with my own eyes the disadvantageous effect of this tax. It is, of course, disquieting and disconcerting to any British citizen to see passing before his eyes vast streams of American motor cars in every great city of Australia and New Zealand, in spite of the fact that we have a considerable preference in our favour in the sale of our cars. It was disclosed to me at the time, and I became convinced of the fact that our difficulty was due to the lack of power in our cars. The reason of the lack of power was the high taxation in this country upon power, which drove the British manufacturer into making a car with as little power as would suffice for the roads of Great Britain. Such a car is entirely inadequate for the rough roads and steep hills of the Dominions, and the high power cars of America were able to defeat the British cars in those markets.
I regard what the Chancellor of the Exchequer is doing to-day as at least a beginning in remedying this very difficult
position. I am sure—at least, I hope—it will have the result, small though it is, of encouraging the British manufacturer of motor cars to go in for higher power cars. It is quite clear that you cannot make cars cheaply if you have to make many different types, and, therefore, for the purpose of mass production and cheap production, you more or less have got to produce one type of car for the kind of purpose I have described. I am not sure that the concession is large enough, but it may induce the manufacturer here to go in for a higher power car which will allow him effectually to compete with the higher power cars of the foreigners in the Dominions. Those are things for which I venture to thank the Chancellor of the Exchequer and the Government.
But I should not be candid with the Committee if I failed entirely to disclose the fact that I am somewhat disappointed with the Budget. It is most startling to find that the Chancellor of the Exchequer, upon the same basis of taxation as last year, has estimated the revenue of 1934 at £13,000,000 less than was obtained in 1933. I say £13,000,000 because that is the real figure. You have got to add to the £2,000,000 difference between £29,000,000 and £31,000,000, £7,500,000 paid to the new Sinking Fund and £3,500,000 paid in respect of the American debt, provision for which is not made in this year's Budget at all. It is as I have said somewhat startling to find in 1934, that we should have this great diminution in revenue. It rather makes one feel inclined to think that if we have emerged from Bleak House we are at least not yet out of the grounds, and that the Expectations are perhaps not as Great as we thought they might be.
But I have no doubt the Chancellor of the Exchequer has taken everything into consideration in arriving at his Estimate. I am probably a less cautious person than he is and I admit that I am perhaps less conscientious. I confess that I am more flamboyant that he is, and perhaps too optimistic; but I should have striven very hard to avoid reaching these rather discouraging results. Perhaps I should have had plausible reasons for thinking that the results might be a little better than he has estimated. Take the case of Estate Duties. Recently a journalist used the somewhat ghoulish phrase that
Death Duties were more buoyant than usual last year. Apparently the Chancellor of the Exchequer takes the view that the buoyancy is going out of that source of revenue, because he estimates that Death Duties will yield £9,000,000 less than last year. I am conscious of the fact that last year there was one very large estate which came into the computation to which we cannot expect any parallel in the present year; but circumstances have changed very greatly not merely last year but in the last few months. A very astute business man in the City of London died over a year ago and one of his friends said that he was clever even in regard to the point of the time of his death because he went out at a time when his investments were at their lowest. The people who are going to die this year have so to speak, missed their market. They are going to disappear when all investments are very much higher than they were a year ago, or even a few months ago, and I find it very difficult to believe that the aggregation of these increments will not equal the great estate to which reference has been made. I think the Chancellor of the Exchequer might have been hopeful that Death Duties will yield as much this year as they did last year. I may, however, be entirely in error in that respect.
It is perfectly true that the Income Tax for this year will be collected upon the income of last year and that while the second half of the year was a prosperous period the first part was somewhat discouraging. The Chancellor of the Exchequer seems to estimate for a yield of Income Tax this year of £1,000,000 less than he got last year. The explanation of that is that while there is an appearance of an increase of £11,000,000 in the estimated yield of Income Tax there is a sum of £12,000,000 which automatically falls into this year because of the change in the methods of collection which was instituted at last Budget, so that, in fact, the real estimate is for a yield of £1,000,000 less this year than last year. I recognise the altered conditions which have produced that point of view. At the same time one has to keep in mind the fact that a reduction in Income Tax, as a matter of experience, has the comforting and encouraging influence of bringing along arrears which people previously were unable to pay or too discouraged
to pay. I shall be very disappointed if we do not find that the yield from Income Tax this year is better than the Chancellor of the Exchequer estimates.
There will also obviously, be greater expenditure in the country through the distribution or the setting free of £20,000,000 among people who otherwise would have had to pay that money in Income Tax. That undoubtedly will make, I should imagine, a considerable difference in Customs and Excise and other duties. In addition, there will be the natural growth of trade. Moreover, it has to be remembered that part of this remission goes into one very important quarter. The right hon. Gentleman the Member for Darwen (Sir H. Samuel) directed attention yesterday to what has long been a blot on our finance, namely, the heavy taxation of money which goes to the reserve accounts of our public companies for the purpose of new equipment and the development of enterprise. It is taxed as if it were money taken to be spent. If the computation given by the late Mr. William Graham, President of the Board of Trade, is correct, £6,000,000 of the £20,000,000 to which I have referred will be saved to the reserves of companies and in the new spirit which has been engendered in our industrial population I shall be disappointed if its use does not lead to a very much higher yield to the revenue through the increased general prosperity of the country.
These, generally, are my comments on the Chancellor of the Exchequer's estimates. They are obviously not ground for complaint, and I am not putting them forward as if I were in any way discouraged by his Budget. It may be said to him: "You could have done something with respect to the allowances" or "You could have taken something off the Entertainments Duty," in which the Chancellor of the Exchequer was, according to his speech, interested. He might for once have taken thought and given some consideration to the national beverage of Scotland as well as the national refreshment of England. These are things with regard to which we are left to hope and perhaps we may take to ourselves the solace that postponed pleasures have a certain wistful attraction of their own and
that benefits anticipated keep up a warm glow in our hearts.
The real disappointment in regard to the Budget is not on this side of the House but on the other side—but curiously enough on no ground that is avowed. I never saw a more melancholy spectacle than I witnessed on the opposite side of the House when the Chancellor of the Exchequer announced that he was going to restore the full unemployment benefit to the workers under the Unemployment Insurance scheme. Their thunder had been stolen. Their slogan had died on their lips. Their grievance had been filched from them. The cry with which they hoped to blast the ears of the country was going to subside into a sigh. From this side of the House hon. Members opposite looked like a parterre of roses suddenly nipped by an autumn frost. I hope they will not lay the blame for their tribulations at the door of the Archbishop of York. I desire publicly to exculpate his Grace from any lot or share in the policy of the Government. In so far as his admonition to my constituents is concerned, in regard what they should do to me, I would remind him that Scottish people have very well established in their hearts the dying words of the great Montrose:
As for bishops, I love them not.
After 24 hours of rest and recuperation His Majesty's Opposition came forward yesterday gaily to the attack. I arrived in the House to find my hon. Friend the Member for Caerphilly (Mr. Morgan Jones) welcoming with an even too boisterous enthusiasm the restoration of the "most unkindest cut of all." Indeed he was indulging a fine frenzy of denunciation of the general iniquities of the Budget. What were the points upon which he fell foul of the Budget? He said that there had been a grievous alteration in the ratio of direct taxation to indirect taxation, and that whereas a year or two ago indirect taxation amounted to only 33 per cent. of the Inland Revenue it had been raised to 45 per cent. He did not take time to tell the Committee—I do not know whether he even stopped himself to think—why that rise in indirect taxation has taken p]ace. It comes from the new tariff duties. Is my hon. Friend prepared
to get rid of them? It is obvious why he does not want to get rid of them. He does not know of any way in which he could provide the £32,000,000 which they bring to the rescue of the country's finances, and he does not want to see set adrift in the streets again 500,000 of his fellow countrymen who have received work through the operation of these duties.
The last point on which he attacked the Budget was because he thought that the Income Tax payer was far too kindly treated. There are certain things which are constantly forgotten in this regard. There is one point of which the Committee was reminded yesterday by the Financial Secretary to the Treasury, that while there has been removed this year from the burden of the Income Tax payers a sum of £20,000,000, the amount which the Income Tax payer subscribed to the country at the critical time in 1931 was £57,000,000. That is not all. There is, of course, the great sacrifices which they have made in the diminution of interest upon Government securities. Nor does that finish the story. There is this further fact, which is constantly ignored if not entirely forgotten, that the 6d. which was contributed by the Income Tax payer in 1931 was not the first 6d. that he had been asked to Bear. In the year 1930, when nobody else was asked to take on any new sacrifice, 6d. was put upon the Income Tax payer. Therefore, it is in respect of 1s. increase in Income Tax that he is now getting back 6d.
This operation is not a selfish one. Everyone who has examined the position knows that in regard to this sort of taxation we had got into a condition of things in which the yield was being reduced because of these heavy imposts. The country was clearly going to get much less in the future if it went on with these heavy burdens upon the Income Tax payer. I do not know whether it is realised that prior to taking off the 6d. the tax upon the highest incomes in the country was 13s. 3d., 5s. in respect of Income Tax and 8s. 3d. in respect of Surtax. That is not only the highest tax upon incomes in the world, but it is higher than anything we ever imposed at the height of our difficulties in the War. It is time that it was reduced. It is an entire fallacy to suppose that taxation
of the richest men in the country is the best way to help the State or the poor.
Who are the rich men? They are not men of vast inherited wealth. I believe that out of the 10 richest men we have there are not two who owe anything to inherited wealth. The rest have shown that they are men who know how to make money, in whose hands' money fructifies through enterprise and by the employment of the people. I take two men who have recently died, Sir John Ellerman and Lord Inchcape. These two men were never affected in their mode of life by high taxation, they were only affected in the amount of their savings, and what you took by taxation from their savings you prevented being employed in industry, as it would have been, sometimes developing coal mines, sometimes making new buildings, and sometimes new ships, and in a vast number of enterprises, all giving employment to the people. To take away from these men the medium in which they have shown themselves to be skilled in working is exactly like crippling the hands of a skilled artisan. It is the way really to reduce the wealth of the country; it is never the way to help the poor.

Mr. EDWARD WILLIAMS: If Income Tax payers are paying such an enormous contribution to the State, will the right hon. Gentleman tell me how much they receive of the £4,000,000,000 of national income?

Sir R. HORNE: I do not know the exact figure, but there is to be taken into consideration the capital upon which the income is made. Hon. Members must not think that it is liquid capital; it is capital which exists in machinery, in works, in buildings, without which nobody would have employment. I cannot believe that the hon. Member wishes to put impediments in the way of these various enterprises because in the result he would see his compatriots going without that work, which, of course, he desires them to have. I come now to another section of hon. Members who have been disappointed by the Budget. The right hon. Member for Darwen made an interesting speech yesterday. With some things that he said I agree. Up to within 10 minutes of the close of his speech we heard very little about tariffs. "King Charles' head" seemed for the moment to have been buried or tucked away in some corner,
but in the end, as was inevitable, he made certain criticisms on the fiscal policy of the Government. He complained, as I understood, that because of the agreements at Ottawa the world had become a system of isolated units, as far as economics are concerned. He did not seem to realise that prior to Ottawa there was not a single great country in the world which was prepared to give us free trade. He seemed to deplore that we were not still a free trade country. I ask the Committee, what would have been our fate to-day, in the midst of world surpluses, if we had had what the right hon. Gentleman desires, a free market into which could be dumped all the products of the world? What employment would you have been able to give your people?
The right hon. Gentleman no doubt is disappointed about the way in which his prophecies have worked out. He has often prophesied that you could not collect Customs duties and at the same time protect industry. We have a revenue of £32,500,000 as a result of Customs duties, and nobody can deny that we have succeeded in protecting our industries to an extent which has largely increased production in this country and given employment to a vast number of men. The right ho. Gentleman has repeatedly prophesied that the result of checking imports would be to reduce exports. The curious thing is that our exports last year, alone of all the countries of the world, increased: and we are now again the largest exporting country in the world. He prophesied also that tariffs would mean an increase in prices. The general experience has been that the assurance of a home market has enabled most people to reduce prices. I am afraid that as a prophet the right hon. Gentleman has been rather a failure. A gift for which the earlier members of his family were noted and distinguished seems to have petered out in the last generation.
There is one matter on which I entirely agree with the right hon. Gentleman, and, as far as I can gather, there is a large body of opinion on these benches which takes the same attitude. We are in favour of applying the £31,000,000 surplus which the Chancellor of the Exchequer has realised this year to reducing the debt on the Unemployment Insurance Fund. I hope the Financial Secretary will forgive me for saying that
his reply last night seemed to be singularly unconvincing on this point. He put up the reply that it was the orthodox and well-recognised system to apply surpluses to reduction of Debt. That sounds rather like a piece of pedantry. When for a period of two years the Chancellor of the Exchequer thinks it inappropriate or inexpedient to budget for the payment of any Debt at all, it cannot be a matter of so much moment. I am prepared to meet the Chancellor on the orthodoxy of the course we propose.
This is indeed a payment of Debt. If it is said that technically it is not a debt of the State but a debt of the Unemployment Insurance Fund, I say that that is rather a subterfuge. It is not in toto a proper debt of the Unemployment Insurance Fund. It was incurred in a large degree not on behalf of the people who were insured but on behalf of people who had fallen out of insurance, to whose succour the Government was bound to come. This aid had to be allied with the Unemployment Insurance Fund, but it was not all relevant to the position of the Unemployment Insurance Fund at all, and it is not equitable to charge the whole of it on the Unemployment Insurance Fund. That is the view which the Insurance Committee took. They said that in equity the Exchequer ought to bear two-thirds of the debt, and the Unemployment Insurance Fund one-third. That is clearly right in principle. Why should the ordinary insured worker, who has performed his obligation through the whole of the period, have charged upon him all the muddling and messings which have gone on in order to provide uneovenanted benefit and transitional payment, and all the artifices and devices which were taken to meet the situation? I feel very strongly about this, and I urge that the matter should be reconsidered.
There are a variety of reasons why it should be reconsidered. There is a practical reason. The right hon. Member for Darwen pointed out that whereas the Unemployment Insurance Fund was paying interest at the rate of 3½ per cent., the Government, by putting this £31,000,000 to paying off the floating Debt, would only get relief in respect of 12s. 6d. per cent., instead of the 3½ per cent.
paid by the Insurance Fund. The situation is really much worse. Till 1938 the Unemployment Insurance Fund has to pay interest on the debt at the rate at which the various sums were borrowed, and the average at which the interest will stand in this period is 42 per cent. On the face of it, it is a bad bargain to pay 4¾ per cent. on one element of debt, and only get a small remission of 12s. 6d. per cent. on its counterpart. Indeed, the case goes much further. What is this contribution? One of the things in which I agree with the hon. Gentleman who opened the Debate to-day was the fact that among all the sacrifices which were made and the new imposts which were put on in 1931, one very particular burden was an increase in the contributions to the Insurance Fund, the employers' contributions going up from 8d. to 10d., the workmen's from 7d. to 10d., and the Government's from 7½d. to 10d. That was an entirely adventitious and new contribution arising out of the crisis, and it was based upon there being 3,000,000 unemployed. To-day there are 2,200,000, and you still keep the contributions at the same rate.
I put forward this proposition, that having restored the full measure of benefit, it is your duty to bring down the contributions to what they were before. Workmen and employers are entitled to it, and if you remember that this is a direct burden on industry, that it is paid whether the works are prospering or not, whether they are making a loss or a profit, and when you recall that for every man an employer takes into his business he has to pay something in the shape of unemployment insurance, you should give him an inducement to increase the number of his employés rather than put a burden upon him for each one that he has. I hope I have not spoken too strongly, but I have done so in the most friendly sipirt, as I am sure the Chancellor of the Exchequer will recognise. It cannot upset his Budget, and I would urge him to review the situation before we come to deal with the matter on the Unemployment Bill. I am sure that nothing but good would come to the country from the change.
I would like now to say a word with regard to the future. It is perfectly true, and we must recognise it, that the prosperous development that we have
made during the last two years has been to some extent in the Dominion market—very slightly—but mainly in the home market. We have been manufacturing much more for ourselves the goods that used to be produced by the foreigner, and that is the real explanation of the increase of employment in this country. Our production has gone up by 5 per cent. Our production of manufactured articles to-day is, curiously enough, as high as it was in 1924, a very remarkable fact. But that is Mainly for the home market; and thank heaven there is still some room for development there. There is much more that can be done; but we must all recognise that we shall never be as we were until international trade is flowing more freely.

Sir HERBERT SAMUEL: "King Charles' head."

Sir R. HORNE: Undoubtedly at the present time the channels of trade are obstructed to a degree which is inimical to the prosperity of the world, and no wise man would question that. Where I always differ from my right hon. Friend is, in the assumption on his part that all that you had to do was to sit still and leave your country open to all the world and that gradually they would follow your lead. The peroration of every speech of my right hon. Friend in this House was, "Let us give the world a lead." We have given the world a lead for 70 years, and nobody has ever followed; and they were delighted to see us giving the world a lead. It suited them very well and paid them better. But what is the situation to-day? I do not want to be controversial about this matter, as I think we ought to examine this problem with as impartial a mind as we can.
I find on looking at the figures that approximately 80 per cent. of our manufactures go to primary producing countries. They are the buyers of our manufactured goods, and the reason why you have such a fall in your sales abroad to primary producing countries has been the fall in the prices of primary produce. You can trace it upon any graph or system you like. Of course, if your manufactured goods were falling in price equally with the prices of primary products, no harm would be done, because they would exchange with each other in
the old ratio, but that, unfortunately, is not the case. While prices of primary products since 1929 have gone down by something like 50 per cent.—and by primary products I am talking of food and raw materials—the price of manufactured articles has only gone down by 21 per cent. You can see immediately that the result of that is that the buying power of food and raw materials, which is what the primary producing countries have to give us, is reduced by 30 per cent. in relation to the manufactures that you are attempting to sell to them, and they cannot meet that difference.
There are, of course, two ways of meeting that situation. You may reduce the prices of your manufactured articles, or you may bring up the prices of your primary products. I do not argue the question to-day as to which you ought to adopt, because I am content to base myself on the view of the Government. Probably one of the most important speeches upon this question that has been made in recent years was that which the Chancellor of the Exchequer delivered to the World Economic Conference, and I ask the leave of the Committee to read these passages from his speech, which illuminate the topic that I have been discussing. He said:
In the opinion of the United Kingdom Delegation, an attempt to obtain equilibrium by further large reductions of costs would be attended by intolerable suffering and holds out no hope of success…. An all-round reduction of costs produces further deflationary effects on prices, so that costs and prices chase each other downwards without ever getting to equilibrium…. A policy of reducing costs and prices has the inevitable effect of very greatly reducing the national income, with the consequence that, in order to balance its accounts, the Government must take by taxation a larger and larger proportion of the income of the country.
Finally there is this sentence:
In the view of the British Delegation, therefore, a solution of our present difficulties must be sought by means of a recovery in the wholesale price level.
That I take to be the declared policy of our country and I ask, What are we doing about it? My right hon. Friend the Chancellor of the Exchequer said in the course of his Budget speech that prices had risen. I have looked at the statistics of these prices since (his speech, and I have found that sterling prices at once rose when we went off gold, and so far as the general
wholesale index is concerned, they are at practically the same figure to-day as they were just after we went off gold. So far as primary produce is concerned prices rose immediately after we went off gold but they did not rise any more until the period at which America went off gold; and then the American prices of primary produce and ours rose almost in unison, but the American prices went faster and are now higher. Even to-day our prices of primary produce do not represent as much as two-thirds of the figure at which they stood in 1927, which was by no means an abnormal year.
It is obvious that something more remains to be done. Going off gold has exhausted itself so far as these prices are concerned; and as for cheap money, there is nothing much more to be expected from it. On the contrary, the Chancellor of the Exchequer indicates that we must look towards periods of dearer money in the future, when business gets active and there is more demand for the money that is available. That, I am sure, will not be immediately. It will be some time before we arrive at that felicity and it need not worry us now. The test of what the Government can do will be revealed at that period, because if they can keep money cheap then, when things are not depressed but are beginning to revive, that will indicate the power which they can exert. Up till now they have been mainly dependent on the depression, as my right hon. Friend said yesterday, for bringing about the cheapness of money. We must, however, give full credit to them and to the Bank of England for the amazing skill with which the conversion operations were managed. That was a feat amounting to genius, and by that operation we have been able to keep money cheaper than it might otherwise have been.
Passing all these things over, what are we going to do now in order to get this rise in wholesale prices which is necessary if we are to begin to be able to sell manufactured goods again to the primary producing countries who are our chief customers? The American nation has sought to increase prices, and with some success, by increasing the number of dollars that they offer for an ounce of gold. That has depreciated the value of the dollar, and thus raised the price of commodities, but it has not had full
success, the real reason being that their monetary policy has been largely cancelled out by the policy of the N.R.A. which has been inimical in its results to the monetary policy which their Government has adopted. If we were to adopt anything like the policy of the American Government, it would not be met with these difficulties and it would probably achieve much more success. I am not, however, putting forward that suggestion.
I speak with bated breath upon these mysteries, but I do ask the Chancellor of the Exchequer—not to-night, because he has many things to reply to, but at some time or another—to give the House of Commons some enlightenment upon what our monetary policy is going to be, in order that the business men of the country may be put in a position to direct their courses with knowledge and with sagacity. Ultimately, although I admit the moment is not now propitious, I am sure that no real solution can be got except by agreement between the British Empire and the United States of America. We are the two great units to-day that are off gold and who, in declaration at least, have precisely the same policy, namely, the raising of prices of primary products. We ought to be able to get agreement, and if we can come to a concerted policy which can be operated not merely throughout the United States of America, but throughout the whole British Empire and those countries which adhere to sterling, we shall have done more than could possibly be conceived for the resuscitation of the trade and commerce of the world and the prosperity of humanity.

4.58 p.m.

Colonel WEDGWOOD: I love this Budget. I am desperately sorry, but I am afraid I must add to the melancholy spectacle offered by the Labour party in this Debate, but let it be at any rate that of a good man struggling with adversity. I welcome the Budget. I think I can spring to that 20 horse-power Austin car. I have already spent in prospect that 6d. on the Income Tax, and there is not a man in this House who does not feel the richer for the halving of the cut. Obviously, the temptation to embrace this Budget is enormous, and yet I think that the melancholy spectacle
offered by the Labour party is as nothing to the melancholy spectacle represented by the right hon. Member for Hillhead (Sir R. Home)—a sound economist blessing a Budget he must hate, a sound Free Trader denouncing the difficulties of world trade at the present time caused by the Government he supports, and above all, a rich man calling on all the powers above to witness to the fact that it is the rich men who have made England.
The right hon Member for Hill-head will not take it ill from me that I use him as a whipping boy, as an example. The right hon. Gentleman is generally rumoured to have large salaries. He inherited nothing, and he earns every penny. Is the right hon. Gentleman's big salary really an advantage to this country? I can conceive it possible for one moment that his salary is halved and that the shareholders get the other half. If he would still do the work would the world be any worse off? Would this country be any worse off? The Chancellor of the Exchequer would be, because he would not get the Super-tax; but really, qua rich man, the right hon. Gentleman is worth nothing. It is qua his brains that he is worth something. What does his salary depend on? If he is able to stand up and argue with a board of directors that he is worth so many thousands a year, he takes into account and his directors take into account the Super-tax and Income Tax that he has to pay, and if he is worth it they will pay it. But it is not his wealth that is of value to this country; it is his brains.
For goodness' sake let us get away once and for all from the idea that rich men make work for other people. No one wants work made for him. Whether he has the money or the Chancellor of the Exchequer has it, the same amount of work is made for the people of this country. If the shareholders or he or the State has got it, that money fructifies in producing wealth and employing people to create that wealth. So I beg the right hon. Gentleman the Member for Hill-head, at whose feet I have sat for years, or months, whose superlative wisdom on inflation or deflation I have always admired, except when he touches on
silver—I implore him to stick to what he knows to be sound economics, and not to try to justify the existence of people whom this world would be much better without.
There is another really serious charge I have to make against the right hon. Gentleman. There is no man in this House more responsible for the settlement of our debt with America, and there is no man in this House who realises better than he does the value to this country of good traditions. Yet in this Budget Debate, the first Debate in which a Chancellor of the Exchequer of this country has deliberately turned down the idea of honouring our obligation, the right hon. Gentleman said "No." I ask the Committee to bear with me for one moment. What is it that we have done? The Chancellor of the Exchequer was asked a question about Chile. He answered it by saying that the reputation of Chile in matters of financial honour had been so great in the past that he was confident that before long Chile would resume the financial obligations which that country had undertaken. Everyone who knew Chile in the past and before it became a dictatorship, knows that that is true. Do we really cheer—the House did cheer—the relegation of Great Britain, with all her traditions, to the status of a South American republic? I do not know what other hon. Members felt, but it seemed to me that I would sooner pay that 6d. in the £ Income Tax and be able to look the Americans in the face. Debts of honour cannot be collected; there is no machinery by which they can be collected. But there are certain traditions which forbid the dishonouring of debts of honour. The most tragic feature is that it is no longer the case that we cannot pay, but that we will not pay. There are in the modern world three degrees of dishonour. There is that of the man who cannot pay his debts—well, he cannot. The next degree is that of the man who can pay and will not pay. We have got down to that. There is a degree below, which is to pay the people one likes and not to pay the people one does not like, and that is where Germany has got. I do hope we shall hear from the Chancellor to-night some prospect of our honouring our word of honour by paying back to the people from whom we
borrowed money when we were in the most difficult position in the world—honouring our obligations to our own flesh and blood, not from the point of view of being able to borrow again, but in order that we may continue to hold up our heads internationally as we have done in this Parliament for 700 years. [Laughter.] It is not a little matter; it is by no means a laughing matter. The only thing that we can preserve, when all else fails is our honour.

Mr. MAINWARING: Why pay for war?

Colonel WEDGWOOD: Why should we preserve our honour? Because we are Englishmen.

Mr. MAINWARING: I said why should you pay for war?

Colonel WEDGWOOD: Then tell the people from whom you borrow at the time when you borrow that you are not going to pay.

Mr. MAINWARING: That is what we ought to have done.

Colonel WEDGWOOD: The real point is this: The Chancellor of the Exchequer has a realised surplus of £31,000,000. Let the Committee reflect for a moment what would have happened if the right hon. Gentleman had done a very unpopular thing, but the honest thing, by paying that money over to the people whose property it is? If he had done that what would have happened? Here I believe that the right hon. Member for Hillhead will agree with me. If that £31,000,000 had gone straight to New York it would not have gone in gold, or rather it might have gone in gold, but ultimately it would have gone in goods.

Mr. BOOTHBY: How?

Colonel WEDGWOOD: In the best kind of china, perhaps, a lot of it. That gets over the tariff barrier does it not? But suppose it is in gold. We have been piling up gold in this country under the Exchange Equalisation Account until we who used to charge all other countries with being gold hoarders are now becoming the principal gold hoarders. I congratulate the Chancellor on the rise in the price of gold, which has given him a profit on his Exchange Equalisation Account, and I hope a nest-egg for future Budgets. But what has been the result?
If that gold were now paid over to America who would be the worse for that transfer? We should have fewer deposits and the Americans would have the gold. Who would be the worse off? We or they? They would have in their gold a call upon English services and upon the services of other people in the world. They would be able to buy goods, to import into America the things which they cannot buy or afford at the present time. They might buy from our people. In so far as they bought from us they would employ people here, whereas that money lying in the bank is employing no one.
The case might be put from another point of view. My chief disappointment in this Budget, and that of the country as a whole, is that now that we have got very cheap money and this vast store of gold, we have not gone in for big national expenditure—not on wasteful non-productive works, but oh all the hundred-and-one things which are urgently demanding capital for the public advantage, productive works or semi-productive works, the electrification of railways, the development of our harbours and of such canals as are worth it, the rebuilding of our towns, the Haussmannising of London, Charing Cross Bridge and all the demands for the useful expenditure of capital which can only be found by the State now. The demand is enormous. What would have happened if, instead of that realised surplus being handed over to Mr. Montagu Norman, we had used it as the basis for raising even larger loans for the development of the industries and trade and the betterment generally of this country?
Here we are faced with the proposition of having 2,000,000 unemployed apparently as a stable number for all time. Can we accept that position? The Government, exceptionally prosperous, not on account entirely of the finance of the Chancellor but chiefly because we went off gold, is apparently accepting the idea of this large proportion of our labour strength being permanently unemployed. I do not ask the Committee to look at Italy or at Germany, but at any rate, faced with the problem, they have recognised it. I think they are squandering their money and will go bankrupt; but we with our experience and our financial strength, with the enormous
needs we have for the reproductive expenditure of money, might have asked our Government to put their thinking-cap on for once and to see whether it was not possible to improve employment and improve the country with the money which is now being used to reduce debt.
My objection to this Budget, apart altogether from our pleasure in having more money to spend, is that it is a deflation Budget which is just like all the deflation Budgets we had after the War. In his unregenerate days the right hon. Member for Hillhead was as bad as the Chancellor of the Exchequer. But then we were all deflationists. Now a new bright light has come over the people of the world. In every country in the world people are beginning to realise that inflation or reflation is the only way to get rid of the dead-weight debt, private as well as public, which is at present hampering the reconstruction of world trade or British industries. So far as the pound has gone down we have benefited. So far as the pound has gone down the burden of debt, which rose when prices were high, has been diminished. No one will accept the idea that the fall in the pound, so far as it has gone, is the equivalent of the enormous fall in the cost of raw materials, or the enormous fall in the cost of all those services which were represented by the debt when it was originally contracted.
Are we quite alive to where we are going? This Budget has, of course, been received by the whole creditor fraternity, from the Bank of England up and down, as an ideal Budget. Already the price of gold has fallen. Already the pound sterling will buy more dollars than it would buy before. Already the beneficial results that came from the fall in the value of the pound are being sapped away. Our export trade, such as there was of it, survived because the pound fell and in the neutral markets of the world, particularly in the gold countries, we could sell more easily. The trades which demanded protection in this country saw, as the pound fell, their automatic tariff barriers rising and the goods of other countries being kept out, but now the process has been reversed. I agree entirely with what has been said to the effect that the best solution of our monetary
difficulties is an agreement with America. It would be desirable to agree with America and to establish a body of countries, a sterling convoy or a dollar convoy, a body of countries which you could trust to balance their Budgets because you cannot keep parity with a country which has not balanced its Budget—

Mr. BOOTHBY: Would the right hon. and gallant Gentleman trust the United States?

Colonel WEDGWOOD: I do not like talking about trusting the United States just now. If we are to get that co-operation between Great Britain and America, that fixing of our currency in terms of theirs which is the basis of any accommodation of that sort, it is vitally important that the pound should not go too high in terms of dollars before we get together. If we could only have stabilised at 4½ dollars to the pound as we tried to do; if we could only have stabilised at the old parity as we tried to do at the time of the Economic Conference; if we could even have stabilised at five dollars to the pound, there is not a business interest in this country which would not be grateful to-day. But it is growing worse and worse. The value of the right hon. Gentleman's reserves in the Bank of England are falling to-day because he has introduced such a beautiful Budget. I do not think he need expect that the Opposition will approve of a Budget which is in the old classical tradition of deflationary Budgets, preventing the pound falling with the dollar, restoring the pound nearer to gold parity, enabling imports to come into this country more freely than before and checking the flow of exports more rigorously than before. Such a Budget may meet with the approval of the Treasury officials and Mr. Montagu Norman, but I do not believe that in the long run it will meet with the approval of the traders of this country, and I am certain that it is not in the interests either of our trade or of the unemployed.

5.19 p.m.

Sir JOHN WARD LAW-MILNE: One of the difficulties facing us in this Debate is the danger of repetition. I am anxious to avoid as far as possible repeating arguments which have already been put before the Committee but it is to some extent inevitable that one should cover at any
rate part of the ground which has already been traversed in this discussion. I desire to devote myself more particularly to that part of the problem which was dealt with by my right hon. Friend the Member for Hillhead (Sir R. Home) in the concluding portion of his speech. But before doing so I wish to refer briefly to some points already raised regarding the actual provisions of the Budget itself. I think my right hon. Friend the Chancellor must be already getting rather tired of hearing praises of his Budget and references to the approval with which his proposals have been received in almost all parts of the country and most parts of the Committee. I agree with my right hon. and gallant Friend the Member for Newcastle-under-Lyme (Colonel Wedgwood) that there is one part of the Committee from which the Budget has received no approval at all but I cannot say that we have had from that quarter any criticism which has carried conviction to Members generally. Indeed, it struck me, and I am sure other hon. Members, that the Socialist party are labouring under a great disadvantage, having suddenly found that the main object for their platform oratory no longer exists.

Mr. BATEY: Wait and see.

Sir J. WARD LAW-MILNE: In the circumstances, it would appear that they will find themselves in great difficulties when the next short Recess occurs and they have to address their constituents. Be that as it may, there is no doubt, I think, that the whole country will receive the Budget with enthusiasm and will feel that on the whole it is not only a fair distribution of the money of which my right hon. Friend finds himself able to dispose, but also a distribution which has been carefully thought out from the point of view of reimbursing those who made the contributions necessary to bring us back on the road to prosperity. At the same time I am bound to say I agree with certain of the criticisms which have been offered in regard to the possibility, if not the probability, that the Chancellor will find himself at the end of the present financial year with an even larger surplus than he seems to expect, or, if he will forgive me for putting it in that way, than he has thought it desirable to tell the House that he expects. I say so because, in spite of the explanation given
by the Financial Secretary to the Treasury last night, it is hard to believe that, if the improvement in trade which the Chancellor expects comes about, there will not be larger returns from Death Duties—owing to the rise in the value of securities—from Income Tax, from Stamp Duties and under other heads.
That ground as I say has been covered but there is one point which it is fair to make in that connection. The Financial Secretary in a friendly way poked a little fun at those of us who suggested last year that the Chancellor might have taken a broader view of the future and might even then have made some reduction in taxation to help in bringing about that restoration in trade of which we have seen signs in the last 12 months. He indicated that those who took that view, if their advice had been followed, would probably claim to-day that it was as a result of the action recommended by them that the present surplus was in sight. I cannot say whether they Would have taken that credit to themselves or not but I think it fair to claim that as the course of events in the last year has resulted in a surplus being secured without any remission of taxation a year ago, it is more than likely that, had the Chancellor felt able to take the advice then given to him, the revival in trade might have been even more definite than has actually been the case.
It must, I think, have been a matter of regret to my right hon. Friend that he has not found it possible, in considering the disposal of the estimated surplus for the coming year, to deal with the very depressed state of the shipping industry. Had he been able to take a slightly more optimistic view of the figures of future revenue he might have been able, in consultation with the President of the Board of Trade, to suggest some way of helping our shipping industry and particularly tramp shipping. I know the many difficulties which exist but I would ask him to consider the fact that any help of that kind would be a help not only to the shipping industry itself but to all the other industries intimately connected with it, such as shipbuilding, iron and steel and the like. A sum of say £5,000,000 or possibly considerably less, given in some form or other to the shipping industry would do more than almost anything
else to give an immediate fillip to trades and industries employing large numbers of men. I do not think that any Member will disagree with the statement that the shipping industry is passing through the most difficult time experienced by almost any industry in this country and that through no fault of its own.
The Chancellor's estimates for the future are based, as he has told us, on his anticipation of the continuation of good trade and of further expansion. We all hope to see it and no doubt there is still considerable possibility of the expansion of our home trade. We are by no means likely in the next year or two to touch the limits of possibility in the development of that trade now that the country and the Government have decided definitely to support their own producers and give them a proper share of their own home market as security for their operations. It is on the point as to how long that can go on, and what is the limit to the development of that trade, that I wish to address a few remarks to the Committee. As I say, the development is likely to go on for a time. According to the last figures I have been able to find, which are those for the year 1930, the total turnover of our internal trade is estimated at £1,750,000,000 whereas our imports last year plus exports to United Kingdom produce come to close on £1,100,000,000. Taking these figures together it will be seen that our import and home produced export trade together amount to something like 40 per cent. of the whole turnover. Therefore, if the extension for which we hope is to be in our home trade alone, the outlook is not as bright as it appears to be at first sight.
Countries such as the United States, which are largely self-supporting and able to develop their standards of life within their own borders, can be very largely dependent upon their home market, and while as I say there is before us a definite extension of our home market in the near future, still, taking the long view, we are in a very different position from such countries as the United States. We in this country cannot expect to go on increasing our standard of living and our home consumption indefinitely because we are dependent to such an
extent upon foreign trade. These foreign markets unfortunately are not at all in the same position as our home market. The foreign markets are not buying from us willingly. It is well known to the Committee that we are getting our foreign markets largely because we are forcing our way into them. We are in this country one of the largest consuming nations of the world and by a system of reciprocal agreements we are able to force other countries to take our goods in exchange for the goods which we take from them. But these foreign buyers, as I say, are not really willing buyers. They are, in fact, unwilling buyers because in some cases they could buy the goods from other countries, producing them at a lower cost because of lower standards of living and they could therefore buy from those other countries as cheaply as if not more cheaply than they can buy from us. Therefore we cannot depend in future upon the foreign markets that we had in the past to be at all willing buyers for our goods.
Where then, looking well ahead, are we to get our markets in the end? How, after the process I have tried to describe and the development of our home markets have gone ahead, are we to get the markets to replace to some extent that 40 per cent. of foreign customers on whom we have depended for a long time past? The answer is certainly not in any system of Free Trade, unless indeed it were universal Free Trade. The answer is certainly not by throwing open our markets to be the dumping ground of the world. That is clear. It is clear, however, that we are not under present conditions, unless there is a much wider system of Free Trade, going to get what I call willing foreign customers. Therefore, I think the Committee will agree with me that, if my premises are correct, we get back to the fact that the only possibility of our getting markets to replace the foreign markets of the past must be within our own Dominions and Colonies.

Colonel WEDGWOOD: Including India?

Sir J. WARDLAW-MILNE: Including India as an improving market on both sides, I hope. The reason is clear because in the Dominions and Colonies, leaving India aside for a moment, it is plain that in these alone we can secure and expect
a standard of life which will make them buyers on a basis of the prices at which we can produce. We cannot produce, if we are to maintain our standard of life in this country at the present or higher rates of wages, for countries on a very low standard on the Continent of Europe and elsewhere which have bought from us largely in the past. In the Dominions and certain of the Colonies there is a standard of life which will enable us to find buyers who can buy from us on the basis of our cost of production. Incidentally, it is well to remember that if the Dominions could buy our goods it would be a natural result that they could settle on the land a large number of people. I do not want to enter into the question of Empire settlement to-day except to say that I think the time has come when the Government will have to take the whole question of Empire settlement, even in the present depressed economic conditions in the Dominions, into immediate consideration. I think the matter has been left too long, and while realising the difficulties of the moment in the Dominions, I think the time has come when the Government should get their plans into being so that they can begin negotiations and the necessary arrangements with the Dominions to get men settled on the land as soon as the economic conditions permit.

Colonel WEDGWOOD: Why not settle them here?

Sir J. WARDLAW-MILNE: In all the discussions on settlement we have included settlement in this country as well as abroad. I do not want to enter into the question of migration or settlement, however, except to say that the Government, I think, should get on with the work of preparation. It is worth remembering that if migration had gone on since the War at the same rate as during the 15 years previous to the War, the number of people who would have settled in the Dominions is more than the total number of unemployed in this country. I do not say they would all have been fitted to go or willing to go, but it is notable that the drop in migration figures more than wipes out the number of our unemployed.
Why cannot the Dominions settle these people on the land and, therefore, cannot be the buyers we want? It is simply
for the reasons, which have been touched on shortly in the last part of his speech by my right hon. Friend the Member for Billhead (Sir R. Home). It is the complete collapse in the wholesale prices of primary products, and until it is possible in the Dominions for men to receive for the primary products they produce prices which give a fair return, it is impossible to get a settlement scheme or any real expansion of buying power. But it is there alone, as I see it, taking the long view, that we can look for increasing consumption of our productions. I find myself therefore up against the problem that, however much we can expand our purchasing power at home, there is a long way to go yet, and however much we may rightly look for the development of our home market, in the end we are bound to be faced with the fact that a large portion of our trade of the past cannot return because the Continental and other countries on low standards of life are not willing buyers of our goods. We thus get back to the only possible markets to whom we can look and that is to an extension of our Dominion trade. I think, therefore, when I draw the Committee's attention to this aspect of our problem, they will realise it is with the object of suggesting to the Government that the time has come to tell us, if they possibly can, what action they propose to take to assist in their avowed policy, with which the whole world agrees, to bring about the raising of wholesale commodity prices. We all know the difficulties, but however much difference of opinon there is on details, there is no dispute, I think, that it is partly a currency problem. After the Economic Conference last year one of the most momentous statements that has ever been made was made by the Empire Premiers. That statement has passed almost without notice. Put shortly, it was a declaration that the time had come when the Empire should try and set up a common currency and financial policy. I ask the Government to let us know what steps they are taking to assist in bringing that about. If we are to get the markets of which I have spoken in future—and we ought to be looking ahead—it is clear we cannot get them without a common currency and financial policy.
If I have a grievance at all against my right hon. Friend—he will know it is not
a personal one—it is that I think the Government are too anxious to get an international agreement and, from my point of view, does not seem fully to appreciate the advantages that would be got immediately from an Empire agreement. I would prefer an international agreement. I am indifferent as to what the currency standard is. I agree that gold, if it can in the future be operated under a satisfactory international arrangement, is possibly the best standard, but for the purpose of getting ahead now, I am indifferent what the standard is. The main point is that we should get a standard upon which we agree, and my only criticism of my right hon. Friend is that I think he is too anxious to get an agreed standard for the world and that perhaps he is hitching his wagon to a star and does not realise or appreciate fully the fact that an Empire standard could be set up, as I believe, without much difficulty or delay. An Empire standard would carry with it the co-operation of half the world to-day and, willingly or unwillingly, the close adherence of the other half before very long.
As I see it, the future of our trade, apart from the further expansion which I believe will come in the home market, depends upon our replacing our unwilling foreign buyers by willing Dominion buyers, and those buyers can only be found when we have a reasonable rise in the price of the products which the Dominions produce. That cannot come about until we can get a currency agreement and a common financial policy. I would like an international and complete world scheme, but if it cannot be got at once, we are losing time, and I press my right hon. Friend to consider once more whether it is not possible for him to do something to give a lead to the Empire. I believe the Empire is anxious for such a lead, and if this country, and he himself, with the tremendously strong position he holds in these matters and the prestige he has, will give the Empire a lead and call, if necessary, another Empire Conference, and as the result of that set up a standard of value to replace that which has been lost—because what is really wrong is that we have destroyed the whole standard of value in the world—it would do more than, anything else to secure our future prosperity. I do not want to be thought the least pessimistic
regarding the immediate outlook; it is only that, looking well ahead, I want to see us ready to replace the necessarily unwilling customer of the Continent. I believe that eventually some form of Free Trade within the Empire, taking into consideration the varying conditions of its different parts, will be possible, and the first essential step is to get a currency and financial agreement. I would not delay now to go beyond the confines of the Empire in the hope of some international agreement in the future. That will come in due time. Let us give the world now the lead it is eagerly waiting for.

5.42 p.m.

Mr. TINKER: The hon. Member for Kidderminster (Sir J. Wardlaw-Milne) said he did not want to repeat what other people had said. I have sat through most of the two days' Debate, and I can assure him that he has kept well clear of other arguments. He touched however on one point which other Members have mentioned, namely, the position of the Labour party and the point that the Chancellor had stolen our thunder and that we are not quite happy. I am not a betting man, but an election is pending in Hammersmith, and I venture to say that we shall win that election and prove to the Government that the electors are not being turned aside by a Budget of this kind. Most of us conjected what would happen. For the last few weeks we have been travelling from "Bleak House" to "Great Expectations" trying to find out what would happen. I have been making certain speculations, and on the day before the Budget I wrote on a piece of paper, in order to show the feeling of Members on this side, that the Budget would provide for the restoration of the 10 per cent. unemployment cut, for the restoration of half the other cuts, and for 6d. off the Income Tax. I prophesied that, because one gets to have some idea of what is likely to happen. I was wrong in thinking the 10 per cent. cut would be restored immediately—that is where I find fault with the Chancellor—and in thinking that the restoration of half the other cuts would be immediate. I knew, of course, that there would be a little delay before the reduction in the Income Tax came into operation.
Dealing, first, with the restoration of the 10 per cent. cut on the unemployed,
I say that the Chancellor, while he was making his gesture, might have made the restoration an immediate one. There was no reason for him to leave it to July instead of 1st May. The people were expecting it, agitation had been rife, there had been meetings all over the country. The Government have given way to that pressure, not merely the pressure from those meetings but from their own supporters, and he ought to have made the restoration operative at once. If he had done so I should not have been so bitter as I have been and shall be this afternoon, because I know what is happening to the unemployed. The restoration of the 10 per cent. cut would mean an addition of 2s. 9d. a week to a man and wife. That 2s. 9d. is really more than 10 per cent., because every household has got to pay the rent. That is the first charge to be met, whether the money they receive is little or much. An extra 2s. 9d. a week during the two months between 1st May and 1st July would have been of enormous value to those people. I have a letter sent to me by an unemployed man which shows what it would have meant to him. It was sent to me about two months ago by a man who has now just got work. He says:
I am very pleased to tell you that I have just done my six weeks' work under the Council, but I am back again now on the unemployment or means test, as I shall call it until they give me a chance to work again. I would Tike to give you a few interesting figures to show you the increased spending power I had when I was working my six weeks' turn. I got two bags of coal, and was able to use gas to the amount of 1s. per week. We had a joint on Sunday, which we never had when I was on the means test. I was able to spend more with the co-operative society, because of my increased spending power.
That shows what a difference it would have made to these people if they could have got the 2s. 9d. immediately instead of on 1st July. I also claim that we should have been giving speedier help to trade in the country, because these people, who are wanting in the necessities of life, would have spent that money immediately.
As to my second prophecy, that those who are to get a restoration of half the cuts they suffered would benefit immediately, there, again, I was wrong. I claim that those people were entitled not only to a full return of all that was taken from them, but an immediate
return, before money was devoted to Income Tax relief. I claim that the Chancellor of the Exchequer—and the promise to the people in mind was such that they would have a restoration of their cuts before there was any question of the reduction of the Income Tax.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): The hon. Member knows that that statement was made yesterday by the hon. Member for Caerphilly (Mr. Morgan Jones) and that when I challenged him to give any evidence in support of it he was unable to do so. Also my hon. Friend the Financial Secretary later quoted the words used by the Prime Minister in which he said that it was not proposed to favour one class of the community against another, but that all would be treated alike. In view of those statements, and of the challenge which the hon. Member for Caerphilly was unable to meet, I do not think the hon. Member ought to repeat that statement.

Mr. TINKER: I withdraw the statement. Perhaps I did overstep the mark. I did not mean that there was a definite promise by any person. Although I was not in the House last night, I read the speech of the Financial Secretary, and noted where he quoted what the Prime Minister said. If it was in the right hon. Gentleman's mind that I meant that he had made a definite statement I withdraw it. My idea was that people had drawn an inference which led them to expect a full restoration before there was any reduction in the Income Tax. That is what people thought and expected and, that is what I meant when I made that statement. As regards the reduction of 6d. in the Income Tax I was present on Tuesday when the hon. Member for South Kensington (Sir W. Davison) thanked the Government for what they had done. He made that statement as chairman of the Income Tax Payers' Society, on their behalf. That is why I had got it in my mind that some relief would be given in that direction. I know the pressure that has been put on the Government from that society, and from Income Tax payers generally, to secure some relief, and so my anticipation of what the Chancellor would do was correct; but, although I had expected it it must not be thought for one moment that I agree with what
was done. I think it was entirely wrong for the Government to do it. The Income Tax payers had no right to expect any relief at this juncture.
I also challenge the statement of the right hon. Member for Hillhead (Sir E. Home) that they have suffered because of their investments being now at a lower rate of interest. From time to time we meet with conflicting statements in this House. When it has been said from these benches that the investments in War Loans and all the other securities that go to make up the war debt were largely contributed by the wealthy classes, we have been challenged by the hon. Member for Farnham (Sir A. M. Samuel), who has told us that those investments are spread over a far wider area, and yet this afternoon the right hon. Member for Hillhead said the rich were suffering in this respect.

Brigadier-General Sir HENRY CROFT: I think in fairness to the right hon. Gentleman, who is not here, that that came in the course of his argument as regards taxation as a whole. I do not think he specified the rich in any way.

Mr. TINKER: I understood him to say the Income Tax payers, and it should be borne in mind that the 6d. reduction will largely come off the incomes of the rich, because the others will get a reduction of only 3d. I put those who get the 6d. in the category of the rich people. When he states that they are suffering because of a reduction of interest I must recall that the money was borrowed at a high rate of interest, 5 per cent. and 6 per cent. being common. To my mind we ought not to have paid that rate, but the country had to do it, because the money was wanted. We were conscripting the people and we ought to have conscripted wealth, but we did not do it. We paid a high rate of interest for the money we borrowed, dating from 1915, and only just recently have we begun to cut down that rate of interest. Those who had money invested have done extremely well out of the State. To me it savours almost of robbery, because the State was borrowing at a time of difficulty, and those people got a high rate of interest because they could demand it.
I see that the right hon. Member for Hillhead has returned, and I hope to have his attention to what I am saying. I was dealing with his point about the rate of interest having been cut down, and I am replying that those investors did extremely well in times past, when they got 6 or 5 per cent. for their money, and I say we have no right to give special consideration to Income Tax payers because of the rate of interest being cut down. Another reason why I say the 6d. ought not to have been taken off the Income Tax is that the Budget surplus might have been devoted to other purposes. Hon. Members on all sides of the House have told us that they want to see people back at work. Why should we not have devoted the surplus to public works? There are many things to be done. I know that the Government have taken a stand against this course, on the ground that we of the Labour party gave out money which was not spent properly, but now that the Budget is balanced and that there is a surplus why not divert that money into channels where it would be more remunerative? When it is handed back to the rich people, some of it is spent, but most of it is held for investment.
There is no question of money not being available for investment. Only a fortnight ago a loan of £150,000,000, offered at 3 per cent.—not a high rate of interest—was subscribed in a couple of hours from the opening of the lists. That bears out my contention that the action of the Chancellor in handing back this money to the Income Tax payers with the object, as he put it, of assisting trade is not justified, because much of that money will not go back into industry or be spent. The placing of money in that loan indicates that the rich cannot find a use for it in industry. If the money were devoted to public works, such as road-mending, bridge-building, house-building and electrification, it would be a means of getting people back to employment. It may be said that £24,000,000 would not go very far in that direction. I would have brought in also the £39,000,000 that has gone to the redemption of debt. That would have given more than £60,000,000 for the purpose.
As I have said, I prophesied what would happen in this Budget, having an idea, knowing the Government we have, that the pressure on behalf of the unemployed
would make them restore the 10 per cent. cut and that the agitation for a restoration of some of the other cuts would have its effect. Further, because the Government are composed largely of the richer classes, I felt certain that the Income Tax payers would get some reduction. But though that was prophesied we condemn what has been done. Taking the Budget as a whole, we can feel satisfied in condemning it as not on the right lines. We certainly welcome the restoration of the cuts, but we cannot welcome the giving back of 6d. to the Income Tax payers at a time when the country is in sore need of money and the restoration of trade.

6.0 p.m.

Lord APSLEY: I listened with considerable interest to the speech of the hon. Member for Kidderminster (Sir J. Wardlaw-Milne), but there was one point which he left out. A Chinese girl, working, say, in Shanghai, 60 hours a week, instead of 48, and for about half the wages, can do better and more careful work than an English girl. That is one of the causes of the trouble upon which hon. Members, including the hon. Member for Ebbw Vale (Mr. A. Bevan) have discoursed during this Debate, and is the reason why we cannot get export markets in countries which give us no particular preference. I would like to ask hon. Members of the Opposition a particular question. A very expensive and highly skilled Labour Convention has been sitting at Geneva for a great many years, and I should like to know what it has done to meet that question, which is its business. China is a member of the League of Nations; so is India, and so was Japan. What steps are the Convention taking to raise the standard of living of the working people?

Mr. GORDON MACDONALD: Ask the Chancellor of the Exchequer.

Lord APSLEY: I will ask the Chancellor of the Exchequer, and I think that he will give an opinion, but the Labour Convention was, I believe, particularly the child of the Opposition when they were in office. The right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) gave us a view which, I gathered, was not altogether popular among his own supporters but it was a view which we
respected, even though we believe he is in error. The error is one into which the "Times" also fell. The right hon. and gallant Member deplored that we appear to be defaulting in our moral and financial debts to our creditors. The real situation is not that we are a defaulting debtor, but that we are an honest broker. Those sums which we borrowed from America we merely handed over to debtors who still owe them to us. The funded Debt alone is sufficient to cover every penny that we owe to America, and we have been making concessions to our debtors and writing off every sum of money that we could afford. "Forgive us our debts as we forgive our debtors" we might well say to America, which has never written off a penny. When we come to the unfunded Debt, Russia alone owes us more than twice the amount that would pay off the American Debt.
The hon. Member for Leigh (Mr. Tinker) made a plea which, I notice, has run generally through the speeches of the Labour party. The hon. Member for Gower (Mr. D. Grenfell) made use of it. It was mostly based upon the speech made yesterday by the hon. Member for East Fulham (Mr. Wilmot), a speech which was of exceptional merit and was listened to with great interest by the Committee. That speech contained some very cogent arguments which, as I have said, the Opposition have taken as the foundation for their case. Their case is that the Chancellor is relieving the rich at the expense of the poor, and is based upon arguments which were shaken very considerably by the speech of the hon. and learned Member for Bridgwater (Mr. Croom-Johnson) who spoke at a late hour last night. The hon. Member for East Fulham pursued the argument no further than the case of a man with a family of three and earning £2,000 a year. Why did he stop at that figure? Because beyond that figure the Income Tax payer is paying Surtax. Alone of those who bore the sacrifices, which were great, the one who receives no concession whatever is the Surtax payer. It is all very well to say that the Surtax payer is a rich man and that he can afford it, but in many cases the Surtax payers have been very hardly hit.
I can remember a right hon. Gentleman of the Opposition who, when he was, I think, First Lord of the Admiralty, was earning, with his private income and
his salary, sufficient to bring him well into the ranks of the Surtax payers. Then came the economic blizzard and the storm which swept the Labour party out, and that right hon. Gentleman returned, not to uncovenanted benefit but to the tender mercies of the co-operative society, and to an income which did not amount to the sum that he was assessed for Surtax for two years after he was in office. That is a case of very considerable hardship about which we have heard and with which we sympathise, but there are hundreds of people in this country who have suffered the same. There are men and women whose incomes decreased and who were yet assessed for Surtax on the years preceding. The slump came and they lost their income, or their interest was reduced under the Conversion schemes, yet during the last few years they have had to pay Surtax in respect of years of comparative prosperity during years when they have had very little with which to pay.
I confess that I am unable to follow either the speech of the hon. Member for East Fulham or that of the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme in the argument that the smaller taxpayer gives more benefit to the State by what he purchases than does the larger taxpayer. The smaller taxpayer is compelled to buy in the cheaper market. He buys, say, at the chain stores, Woolworth's, Marks and Spencer's or the co-operative stores, and they again buy, in the cheapest market, goods which are mostly produced in Japan, Russia or Czechoslovakia, or wherever they can get adequately good articles for the cheapest possible price. The wealthier taxpayer, the man with an income of over £1,000 a year, will, as far as possible, obtain quality goods, such, let us say, as the best Wedgwood china. He demands goods of the best quality, and he will do his level best to support British industries which rely upon quality for their production.
The hon. Member for Farnham (Sir A. M. Samuel) yesterday, at the beginning of a most interesting speech, castigated the hon. and gallant Member for North-East Bethnal Green (Major Nathan) for the latter's attitude in regard to Estate Duties. I confess that I was rejoicing as I heard the words coming
from the hon. and gallant Member. I felt "Here is another Samuel come to judgment. Here at last is one party in the opposition, though a small one in numbers but great in quality and noble in traditions, which is at last marching towards orthodox finance." When I heard the hon. and gallant Gentleman say that Estate Duties were not income, but that they were derived from capital and were a form of capital levy, I noticed his proximity to the Labour party, and I remembered the words of the hon. Member for Caerphilly (Mr. M. Jones) on the same subject. Then I thought "Welshmen are standing shoulder to shoulder, having discovered one great and substantial truth." Hon. Members who urged the Chancellor of the Exchequer to spend more, such as the hon. Member for Huddersfield (Mr. Mabane) and the right hon. Gentleman the Member for Hillhead (Sir R. Horne) to-day, should look very carefully at the situation and ponder upon it, when they consider the words of the hon. and gallant Member for Armagh (Sir W. Allen), who pointed out yesterday that one-third of the Chancellor's surplus depended upon the Estate Duty from one head only.
As the hon. and gallant Member for North-East Bethnal Green very rightly said, not only does that money which comes in in the form of capital transferred to the State, have to be replaced on account of loss of revenue during the course of many years that follow, but there is the loss to be deplored of the great mind who directed that estate while it was still intact. The Government propose to bring in a Bill to limit the betting of poor people, yet they stand convicted of inconsistency when the greatest speculator is the Chancellor of the Exchequer himself who is forced to speculate in order to balance his Budget—and what a morbid form of speculation, counting the gray hairs of the ablest of our citizens and wondering how soon it will be before they are brought down to the grave so that the Exchequer may benefit. That is a method of finance that does not appeal to me, and I do not believe that it appeals to the Chancellor or to any orthodox financier in this country.
The hon. and gallant Member for North-East Bethnal Green might have laid further stress on the effect of large blocks of shares being suddenly thrown
on the market through some estate falling due and having to pay Surtax. The effects are more far-reaching than one might think upon many small investors. The effect upon landed property is yet more serious. Landed estates in this country have been thrown on to the market in increasing numbers year by year, because the heirs have been unable to carry them on, on account of the effect of Estate Duties. Tenants who have looked upon their farms for many generations as their homes have been given notice to quit within the year. The estate is at last purchased by some speculator who will take it for a fraction of its original value, will sell off the timber and building materials for what he can get and will finally divide the miserable residue into lots and sell them to whoever cares to buy. Smallholders perhaps will buy plots, erect jerry-built houses and eke out a precarious living trying by unremitting toil and considerable hardship, to compete in falling markets in the production of eggs, pigs or market gardening produce. That is what is happening to a greater and greater extent in this country, yet the Prime Minister, the Lord President of the Council, and the Chancellor of the Exchequer make eloquent and impassioned speeches both inside and outside this House, urging us to do all that we can to preserve the British countryside It is they alone who have the power to assist in that preservation; yet they never lift a finger. It is as though we were to receive lectures on the beauty of a rose garden and admonitions to spend more money to improve the breed of roses, and get better blooms. Yet, even while they speak, the hands that hold the syringe are withheld, which hands can alone save the flowers from the withering blight that affects them
There is one other matter to which I should like to refer. The Chancellor of the Exchequer made some forecast in his Budget speech of a change that he was bringing forward in regard to Income Tax on certain rents and mining royalties. I do not expect that many Members of the Committee gathered what those changes would be, and I must confess that, when I read them in the Budget Resolutions, I was unable, not being a solicitor, to gather much wisdom from them; but, having sought learned advice, I understand that all that is meant is
that coal mines which have been run at a loss have not been paying Income Tax and have not been deducting Income Tax at the source on the mining royalties, whereas, in the case of coal mines which have been running at a profit, such Income Tax is deducted at the source. The right hon. Gentleman will correct me if I am wrong, but I gather that that has been found to be the case owing to some bad drafting of former legislation, and I suppose that some owners have taken advantage of it, or a judicial decision has been given under which they could take advantage of it. If that be the case, the Committee would have no cause to quarrel with this proposal, but at the same time I would ask my right hon Friend if he will not consider very seriously—as, indeed, I have been promised in this House that attention would be given to it—a case of inequality and unfairness in the assessment of taxation which befalls this particular though very limited class of people.
I gather that in this case, as in all cases of taxation, we are concerned with equity, and not with the actual numbers or professions of the people concerned. As the hon. Member for South Salford (Mr. Stourton) remarked in his speech last night, these particular mineral royalty owners are paying 15s. 9d. in the £. If they were very rich men they might not object so much to that, if it were part of the ordinary Income Tax and Surtax scheme, but the fact is that at the present moment the royalty owners pay 1s. in the £ for royalty duty, and 1s. in the £ towards the Miners' Welfare Fund; but they pay Income Tax and Surtax on the gross amount, so that they are paying Income Tax and Surtax on money already paid to the State for royalty duty and Miners' Welfare Fund. To my mind that is not equitable, and though, as I have said, it affects but a small number of the population of this country, it should be remedied, because of the growing feeling of discontent in the country that taxation is not on a fair basis. Taxation, after all, depends on consent and equity; otherwise taxation cannot be raised. There is a growing feeling in this country that the Government—the State, as it is called—is trying to get the uttermost farthing out of the people.
Go out for money where you can get it," says the hon. Member for Gower. That, however, takes us back to the days
of Henry VII—to benevolences, and forced loans, and processions round the country to see how wealthy the King's various lieges were, so that he could decide at what amounts to assess them in the notices that followed very shortly afterwards. It is a principle which will be disastrous if we allow it to grow. It will mean that that Government will produce larger and larger offices for Income Tax collection all over the country, in order to try to detect any abuse of evasion that there might be; while the people of this country, great and small, feeling that they are being inequitably taxed, would try to find ways through and round taxation in order to avoid it, and then the Government would take more drastic action again. Further, a class of people would grow up whom, if we were in India, we might call babus—small legal advisers, such as, I must confess, are already growing now, both in the villages and in the towns—who advise people for a small fee as to the best way in which they can either "wangle" benefit from the Government, whether they deserve it or not, or, in the case of Income Tax payers, as to the best way in which they can avoid their Income Tax, rates, or any other payment due to the Government. In a very short time we shall become a nation of Greeks; we shall become a nation that has forgotten all the traditions on which our democracy was built; we shall become a nation ripe and thoroughly deserving to be governed by a dictator—and that is what we shall get. Therefore, I hope that this matter will be checked and nipped in the bud, so that no further grievance may be felt in regard to it.

6.21 p.m.

Sir H. CROFT: I was one of those who cheered rather loudly when an hon. Member behind me withdrew a statement which he had made with regard to His Majesty's Government and the Chancellor of the Exchequer being pledged to restore all the cuts before any reduction was made in Income Tax. I only desire to say that I should not have cheered his withdrawal quite so loudly had I known what he was going to say in trying to explain that his withdrawal was not quite what it seemed. We had a precious speech from my right hon. and gallant Friend, if he will allow me to call him so, although it is not correct, with regard
to the American Debt. I should like to say that in spirit I feel very largely with him although I do not agree with the actual points that he made. There is another type of debt in addition to those to which he referred, and that is a debt in regard to which the creditor makes no effort whatever to assist the debtor to pay, but rather puts obstruction in his way. I, for one, have always felt that the United States has very largely brought these great calamities upon herself by her refusal to endeavour to join with the comity of nations in order to see how these debts might be wiped out all round. I have always held the view that we should have made it abundantly clear to the United States not many years ago that we were perfectly prepared to try to carry out in every direction our honourable undertakings, but that she had made it as difficult as possible; and that we were prepared to provide her with goods and services—and I think we should have been wise to specify them—equivalent to the interest on the debt. I think the whole world would have been surprised at the generosity of the line we had taken, in view of the attitude that has been adopted by other debtor countries. That is all that I want to say on that matter.
As one who has had cause, unfortunately, on recent occasions, and whom it has deeply pained, to differ from His Majesty's Government on another subject, which I cannot mention to-day but on which I have felt their policy to be entirely opposed to Conservative faith and principles, I am very delighted to rise to my feet and say that I think the Chancellor's Budget is one on which the whole country ought to congratulate him. It is a wise Budget. Even the prophet who sits on the mountains behind me here apparently thought that it was going to be somewhat along these lines, and there is no doubt that business in general in this country will welcome the decision of the Chancellor of the Exchequer. But I think it is only right that someone should recall the fact, following, perhaps, the line taken by my right hon. Friend the Member for Hillhead (Sir R. Home), that this Budget is the proof of the first-fruits of a first full year of the new revolution in fiscal policy. It is, in fact, a vindication of the tariff policy. I do not want
to go into any details, but I agree with what my right hon. Friend said concerning the speech of the right hon. Gentleman the Member for Darwen (Sir H. Samuel). But there is one side of the tariff question as it affects the national finances which has hardly been dealt with, and that is in regard to the Conversion scheme. I do not think it has ever been mentioned, but the fact remains that the great advance in British credit, from the terribly low ebb to which it had fallen, synchronised almost to the moment with the avowed purpose of this country to abandon Free Trade, and each successive determination more fully to produce our own products in our own factories and from our own soil has added to that credit. That is a fact which we ought to recognise.
That great Conversion scheme, which was brought about by this state of affairs, was in turn made possible by our determination to balance our trade and to balance our Budget. It represents a considerable sum of money, and, if we add the revenue duties which have come from various tariff operations, the fact that in the last two years something like £20,000,000 has been saved in unemployment pay owing to the reduction of the number of persons unemployed in industry, and also the fact that probably Income Tax and Surtax would have been lower by at least £20,000,000 but for the recovery in industry due to the tariffs, I think it can be claimed that to-day this country is saving something like £100,000,000 per annum as a result of bringing tariffs into the picture. There are other great facts which are matters for congratulation—the fact that a very large number of persons have been brought back into employment, the fact that a large number of new factories have been brought into this country, and the fact that we alone in all the world, with the possible exception of Japan, are increasing our export trade. All these facts ought to be very encouraging, and I think it is true that the right hon. Gentleman the Member for Darwen will no longer suffer from the dread nightmare that he has known in the past, but will be able to sleep comfortably in his bed in future, realising that your food will not cost you more, that you can raise revenue and at the same time give employment to your people, and that
your export trade will not suffer but will gain. We may regretfully realise that the purpose of the Liberal party has ceased to exist, but we are grateful that anxiety need no longer be suffered by the few remaining individuals of that party.
What is more important is that the proof of the efficacy of tariffs has been a knock-out blow to Socialism. But for the tariffs it would not have been possible to restore the cuts or reduce taxation—[Interruption.] Hon. Members say that that has nothing to do with it, but that is the trouble—they will not follow events. They do not realise that we have £35,000,000 of new revenue from tariffs, if the Free State be included, and that that has alone made it possible for my right hon. Friend to restore the position. We could not have had a surplus this year but for the wise policy which has been adopted and which has given such a stimulus in all these varied directions. I should have thought that was obvious. [Interruption.] I do not know what the Hammersmith electors are going to do, but you will always find that there is a great lag in intelligence among some Socialist electors, and they do not appreciate facts sometimes for a week or two. The fact remains that this policy has rescued the country from the utter despair to which hon. Members on those benches reduced Great Britain. Everyone will realise that under no conceivable form of policy which they have ever suggested could those vast results which I have summarised have been achieved.
I should like to say a, word with regard to the future. I think the Government have every reason to be congratulated on their financial and economic policy, but, having proved their case so well to the people of the country, and as there is no longer a brake on the wheels, why do they weary in well doing? The Chancellor of the Exchequer has many things to occupy his attention, but I expect he realises that still there are £140,000,000 worth of foreign manufactured goods coming into the country. I do not think there is anyone, except a hide-bound opponent of the policy altogether, who will deny that at least £70,000,000 of those manufactures, as we have proved, can be produced in this country. I would ask the right hon. Gentleman whether the time has not come to look into this picture.
I should like to give one or two figures with regard to the extraordinary increase in these exports in the last few months. When we first went off gold, it gave a very protective effect to our industries, but do not let us forget that the fiscal policy adopted by the Government was adopted having regard to the effect of our going off gold at that time, and that advantage, of course, has very greatly disappeared owing to the rearrangement of the currencies of foreign countries. I wonder if the Chancellor and the Financial Secretary realise that in the first two months of this year, compared with the first two months of last year, the total iron and steel goods coming into the country have increased by over 65 per cent., steel bars and rods by 106 per cent., cotton yarns by 127 per cent., cotton piece goods by 61 per cent., silk piece goods by 52 per cent., artificial silk yarn by 118 per cent., carpets by 72 per cent., and hats and caps by 95 per cent. I could go on. That is a very serious indication of increase. This is in no way critical of the Government. I am simply asking if they realise those facts and does it not indicate that the tariff in its present condition is not adequate to give protection to these industries some of which I have enumerated.
I want to ask this further question. What is our policy? I do not ask it with any sort of sneer, because I think the results have been remarkable. Every man, woman and child in the country owes a debt of gratitude to the Government. But what is the intention of our policy? Is it merely a revenue policy or is it protective or is it a kind of mixture of the two? I have never thought that we were quite fair to the Advisory Committee—which is beyond political reproach as it is also beyond political approach, I am glad to say—or to Parliament or to the nation, because we have never indicated, as Parliament, to that Committee the precise end that we wish them to aim at. I urge that the time has now arrived when Parliament ought to give some indication and it is its duty to state a formula, and the formula that I suggest is that the tariff should aim at giving the maximum amount of employment to our people without having any obvious adverse effect on other industries. If we could do that, we should have a wonderful chance with this vast
importation of foreign manufactured goods still going on. Surely the Government would like to see the same progressive picture next year as they have seen this, and who can doubt that, if they really grapple with that subject of the importation of foreign manufactured goods, we are going to see several hundred thousand more British workers in employment?
I should like to say one more word with regard to future policy. I think the British Empire ought to be getting together on the matter of currency. Without going into the subject to any depth, I would ask Members of the Government this one question. Suppose we could put the clock back, could anyone conceive anything quite so mad as to see in the British Empire all these different kinds of currency and kinds of value? It will be agreed that, had we foreseen what was going to happen, we should have endeavoured to have the same currency throughout the Empire. If that is true of the past, surely it must have some truth at present. I hope also the Government will not turn down the possibility of discussion with a view to bringing silver into the picture, for the simple reason that the world got on very well with gold and silver in the past and, unless there is some reason which we have never had presented to us why silver should be entirely ruled out, it is the best hope of increasing the purchasing power of the 550,000,000 people who dwell in the East and elsewhere.
Have the Government now had time to look forward to a long-distance policy with a view to aiding the budgetary position permanently? Unemployment has been a colossal burden the cost of which has been retarding the whole of the turning of the wheels of industry and made it almost impossible for us to get back speedily to prosperity. Had migration to the Empire gone on since the War at the same average rate as during the six years before the War, this country would have saved nearly £1,000,000,000. It is now seven months since a record number of Members of the House tabled a Motion, not asking very much, simply asking that the Prime Minister would arrange that the Government should have early consultation with all the Governments of the Empire to try to plan out a long-distance scheme with regard to the redistribution
of the population of the Empire. We were told then that the Undersecretary for the Dominions must have time to report to the Secretary of State. He has had seven months and, without any kind of viciousness whatever, I suggest that we might soon hear what is the intention of the Government in regard to this question. We have to face the fact that our Budget is never going to be of the rosy character that all parties desire to see so long as we have to contemplate the permanent unemployment of something like 1,500,000 to 2,000,000 people. My own belief is that during the next 10 years you will see no great change in that respect unless you can have an entirely new orientation of policy, not away from the Empire but towards the Empire.
There have been two big points put up against such a financial and economic policy as I have indicated. The first is that the Dominions will not have it, so why waste the time of the House in talking about it? That is not a fact. I am not going to disclose any sources of information, but I definitely say that there are numerous Governments in the British Empire—States, Provinces and Dominions—which are ready to talk with the Government when they are ready. That, I hope, will be accepted. Since the report was published of the Empire Settlement and Development Committee it has had an extraordinary favourable reception almost throughout the Empire. There is hardly a newspaper, as far as I can see, in Canada which has not expressed its readiness to consider the question, and some of them have regarded it with the utmost enthusiasm. We have been told from the Government benches and from the benches below the Gangway that it is no good talking about a future economic and financial policy of this description as long as there is no market for any increased primary production within the Empire. I cannot believe for a moment that anyone who realises the fact that we are still importing £172,000,000 worth of foreign agricultural products each year would have the effrontery to say there is no market for our people in the Empire for greater production. The market is here. The only question is whether the will is here.
This question is not going to wait for all time. You will never have such opportunities
of picking up considerable territories in the Empire cheaply that you have to-day. Now is the chance. It is going to take years to plan out a full scheme. Surely we ought to commence and, when we see indications even in Imperial quarters—people suggesting that we should still further limit the importation of domestic products into the country—I am well aware of the difficulties, but I believe that a very large number of Members who believe that the salvation of this country came from the Empire in 1914, and that the salvation of the country lies with the Empire in the future, will not tolerate any endeavour seriously to restrict the producers in the Empire overseas, any more than they will consent to see our home producers so restricted. I beg the Government not to make agreements with foreign countries, for comparatively trifling gains, which may have a restricting influence upon the whole interplay of Imperial commerce in days to come. We ought to leave these shadows behind us and work for the great Imperial end of endeavouring to see that the commodities of the Mother Country and the Dominions overseas shall be as freely as possible exchanged in the days to come, that we should endeavour to plan their production so that they are not disastrously over-produced in any one part of the Empire, and work steadily towards that star which, I believe, is visible in all parts of this House, the star leading to Imperial unity.

6.45 p.m.

Mr. T. SMITH: The hon. and gallant Member for Bournemouth (Sir H. Croft) on nearly every occasion that he addresses this Assembly makes a plea for dealing with the unemployment problem by transferring the people to somewhere else in the Empire. A few weeks ago we had a very interesting speech from him in which he advocated that when we transferred people from this country to other parts of the Empire, we should establish certain small communities in those parts of the Empire, which should be named after the towns and villages of this country from which the people had gone. The idea of emigration as a solution of our unemployment problem always strikes me more or less as an excuse rather than a getting down to the problem. In this country the greatest amount of unemployment is in the heavy industries. I
have some little knowledge of the coal production of the world, and I should like to know from the hon. and gallant Member for Bournemouth where in the Empire he would plant the 300,000 mine workers who are out of work, many of whom seem to have no chance of ever getting back into the pit. If emigration were the solution of a country's problems, Ireland ought to have been a very prosperous country during the nineteenth century. The people of Ireland emigrated to the extent of about 50 per cent. during the last century, and I do not think Ireland is any better off as the result of it.
It would be much better if we got down to some of the problems in our heavy industries rather than talk so much about transplanting the unemployed. In my opinion there has to be a reduction of the hours of those who work in the heavy industries in order to absorb larger numbers, and a recognition of the fact that with increased mechanisation and rationalisation the older type of man is being displaced from industry with very little chance of getting back into it. I should have liked to have seen the Chancellor of the Exchequer courageous enough to have used the greater portion of his surplus of £29,000,000 to institute a pension scheme at 60 years for those who appear to be the unwanted in industry. I assure him that it would have been very popular in the country, and would have dealt with a very real problem.
Many descriptions have been given with regard to the Budget, and we heard the right hon. Member for Hillhead (Sir R. Home) this afternoon outline a policy with regard to the rich men which appeared to be worthy of the economics of the early part of the nineteenth century. His point of view was that we bad to have rich people in order to keep the poor, and that the more rich people there were the better it would be for the poor. Some of the rich people are only rich because they have exploited the poor. We on these benches believe that there ought to be a more equal distribution of the products of labour with far fewer rich people and far fewer poor people. The Chancellor of the Exchequer said that everybody in the Committee would agree that there ought to be the fullest
possible restoration of the unemployment cuts, and he went on to say that from 1st July next the 15s. 3d. is to be raised to 17s. It would have been much better to have made that operate from 1st May instead of from 1st July, because a great many of the unemployed are in a terribly bad position. They have been passing through a very hard time, and the increase ought to have operated at the earliest possible moment. I dispute the argument that we are restoring the unemployment cut to its fullest extent. We have to remember that prior to the Economy Act, 1931, the unemployed man could draw 74 weeks' continuous benefit, but under the Economy Act he was limited to a maximum of 26 weeks, and after 26 weeks he was relieved only on the basis of need, with the means test in operation.
I want the Chancellor of the Exchequer or the Financial Secretary to try to show how the propositions of the Chancellor of the Exchequer are to restore the cuts to those who are now being relieved on the basis of the means test. One of the most cruel and callous things that was ever put into operation was the means test in 1931, and it would have been more just to have used some of the Budget surplus to have relieved the means test and the hardship it is causing than to have reduced Income Tax from 5s. to 4s. 6d. The means test can be appreciated only by those who have some knowledge of working class life. There are thousands of people in my constituency being dealt with under the means test, and they want to know how their position is to be benefited under the provisions of the present Budget. We were told that, as far as transitional payments are concerned, there is to be a Supplementary Estimate brought in to deal with the matter, but what guarantee have we that those transitional people are to get the full benefit of that Supplementary Estimate? Are the public assistance committees to be instructed that they must pay this additional benefit to the transitional people, or is it to be left to the discretion of the people who have to handle it? We should like to have some definite information upon that point.
We have been told that, owing to the attitude of the National Government, from 600,000 to 800,000 more people are
in work to-day than 12 months ago. This is a most remarkable Government from the point of view of unemployment figures. When, a couple of years ago, the figures were increasing, we had the spokesmen of the Government saying that the figures were going up owing to world economic causes over which the Government had no control, but the very moment the figures started to fall, we were told that they were falling on account of something which the National Government had done. There is another interesting side to the picture. The figures, as far as people receiving poor relief are concerned, show quite a different situation. I asked the Minister of Health to-day if he could give the figures of the number of people in receipt of Poor Law relief at the latest available date, contrasting those figures with those of three years ago. On 1st January, 1932, there were 1,143,025 persons drawing poor relief, and on 1st January, 1934, there were 1,402,725, so that when the Government claim credit for having put back into industry 600,000 or 700,000 people, they should pay some little attention to the fact that the Poor Law figures are increasing largely because, in my opinion, thousands of people are being turned off transitional payments in order to become ordinary Poor Law cases. I should like to know how, as a result of the Budget, any relief is to be given to them. Whatever may be said to the contrary, it is a Budget which benefits the rich rather than the poor.
It would have been much fairer to have restored the Income Tax allowances to what they were in 1931, rather than to have reduced the Income Tax by the straight 6d. We are told that there is equality of sacrifice. There is no such thing. There should be equality of restoration. We heard it said at the election that, the Government being in difficulties, all classes of the community had to share equally in the common sacrifice. But there is no such thing as equality of sacrifice. If you take 10 per cent. from the man who is unemployed you hurt him far harder than the man who has an income of £1,000 a year and from whom you take 10 per cent. If, for example, you took the position even of the man with £500 a year, and you took £1 a week from him, you would still leave him £9 a week upon which to live, and the sacrifice of that man would not
be the same as the sacrifice of the man who had had his unemployment pay reduced from 17s. to 15s. 3d. You would allow the man with the big income to have at least three good meals a day, whereas the unemployed man could not get three decent meals a day. To talk about the Budget being based on equality of restoration is certainly unfair.
While we welcome the restoration of the benefit to the unemployed, we do not think that it fully restores the cut. It does not go far enough, and it ought to operate sooner than 1st July. We also think that the cuts on the other services ought to be fully restored. The Chancellor of the Exchequer would have been reflecting the opinion of the country if he had restored the full cuts all round before he had reduced the Income Tax by 6d. in the £. It would have been more popular and more just. I am sure that if hon. Members on the other side of the House go to their constituencies during the next two or three weeks and deal with the Budget fairly and entirely on its merits, they will find that the ordinary working-class organisation believes that it is a Budget which will benefit the rich rather than help the poor, as they ought to be helped.

6.58 p.m.

Sir ASSHETON POWNALL: I am one who disagrees with the hon. Gentleman the Member for Normanton (Mr. T. Smith) and thinks that, as far as is possible, in this imperfect world, there is a great measure of equality of restitution in the Budget. In view of the criticisms from the benches opposite, I have been at pains to take out one or two figures with regard to what the Budget does for the Income Tax payer, for whom hon. Gentlemen opposite, as a rule, have very little sympathy. The Chancellor of the Exchequer, in his Budget speech, said that Income Tax payers found no less than £57,500,000 out of the taxation imposed in 1931. In a full year the benefit which they are now getting comes to less than half that amount. It comes to £24,000,000 in a full year out of the £57,000,000 odd. I think that it is not unfair, as my right hon. Friend the Member for Hillhead (Sir R. Home) mentioned earlier in the day, to point out that in 1930, under the Socialist Government, there had been a further increase of 6d., which brings in some
£24,000,000. In other words, since the advent of the Socialist Government in 1929, there has been an increase of direct taxation paid by the Income Tax payer of £81,000,000, of which £24,000,000 is now in process of being restored. They are not having restored to them even half of what has been taken from them in the last four years, not even a third, but about 3½d. in every shilling. I think that it goes to prove that, if anything, the Income Tax payers have had rather a hard deal than a too generous one.
With regard to the point made by hon. Members opposite, how is it that salary cuts are only being restored as from 1st July, when the Income Tax reduction operates from the beginning of April? I suggest two things for consideration by this Committee. The first is that we budget from April to April. Were we to have a 5s. rate for one quarter of the year and a 4s. 6d. rate for the balance, the average rate throughout the year would be 4s. 7½d. That, I imagine, from the Minister's point of view, would be extraordinarily difficult to cope with. Further, it must be remembered that, while all these cuts were dated from 1st October, 1931, the Income Tax increase was dated back six months to 1st April, 1931. In other words, even if the Income Tax payer is now getting three months' advantage, he then had a six months' shortage, and therefore only half is being paid back to him of that of which he went short in the year 1931.
A further point, and one very germane to this argument, is with regard to the immense Conversion operations, only made possible by the credit of the National Government, which took place, as we all know, two years ago. I wonder how many hon. Members opposite realise that, but for those Conversion operations taking place—as I said, owing to the credit then enjoyed by the Government, which I do not think would have been the case if there had been an unbalanced Budget—something between £40,000,000 and £50,000,000 was saved each year. In other words, but for that we should now have a deficit, in round figures, of £15,000,000 or £20,000,000 instead of this surplus, which, we are very glad to see, has made it possible in large measure to restore the cuts.
Frankly, I wish that my right hon. Friend had been slightly more optimistic. I listened to the right hon. Member for Hillhead (Sir R. Home); I was about to make the same remarks as he made with regard to the Death Duties. One point he omitted to mention was that not only do you get an extra yield from an increase in Stock Exchange values, but you also get the estate coming into a higher category. The amount paid on an estate of £120,000, for instance, is very appreciably more than on an estate of £80,000. That is roughly the difference which has been caused by the great increase in capital values during the last two years owing to our Conversion operations. My own impression is that the Death Duties and other duties will yield considerably more than what the Chancellor expects. I hope that I am right. I think that he might be rather more optimistic, and he could then have an extra £3,000,000 or £4,000,000 for restoring the cuts in full. I should much have preferred a slight measure of optimism to be shown this year, and to have had the cuts restored in full.
I want to say a word on behalf of a class whose grievances are not often voiced in this House, although the hon. Member for East Fulham (Mr. Wilmot) did so yesterday. I refer to the black-coated worker. I should have been very glad had it been possible to restore in some measure the allowances which were given to him prior to 1931. It can, of course, be argued that £225, the personal allowance, had a spending power in 1920, about the time when these scales were set up, of roughly the same amount as £150, the present figure. That, I believe, is an argument that can be, and was, put forward with regard to the reduction of these allowances. Also I believe, though the hon. Member did not mention it yesterday, that when in 1931 we decreased these allowances, we increased the earned income allowance from one-sixth to one-fifth. That obviously makes a very considerable difference to the black-coated worker, if he is allowed to deduct one-fifth of the £300—£600 which he earns in a year instead of one-sixth, before the Income Tax starts to be paid.
There is, however, this further point of view on his behalf, which I do not think receives general recognition in the House.
The black-coated workers do not benefit appreciably by what we call the social services. Unemployment Insurance they do not come into; Health Insurance they do not as a rule come into; they may or may not pay for the education of their own children. There is, however, no getting away from the fact that they are contributing large sums towards the social services, the benefit of which goes to others of a financial position somewhat below their own. I make a strong plea to the Financial Secretary that next year, when, if my prognostigation is correct, we shall have a great deal of money in hand, something should be done for the black-coated workers, who, in this Budget, come in for a relatively small extent of the benefit.
Just one word on the last of the topics mentioned this evening—the American debt. I did not have the advantage of hearing what my right hon. and gallant Friend the Member for Newcastle-under-Lyme (Colonel Wedgwood) said with regard to it, but we all have to realise that at the present time the United States Congress are considering whether or not they shall regard this country as a defaulter. The President—as I think in the most statemanlike way—took our token payment in substitution for a full payment and did not regard this country as being in default. Nevertheless, by what is called the Johnson Bill, which is now on its way through Congress, though it has not actually been passed, this country and others are apparently to be treated as in default, notwithstanding that these token payments have been accepted by the President. It is a very open question now whether, if this country is treated as a defaulter, we should continue to pay the relatively small sum of £3,000,000. By the terms of the Balfour Note a dozen years ago we undertook not to accept more than we paid. For the last two years we have paid some £20,000,000 odd more than we have ourselves received. As my hon. Friend mentioned the other day, in reply to a question of mine, Italy is paying considerable token sums to the United States at this time. We are paying token sums to the United States, but Italy is paying us no token sum. I know that there is a Lausanne Agreement which might preclude us from raising the point at the present moment, but I ask the Chancellor and his deputies
to go into that question most carefully, and to consider whether, if we are to be branded throughout the world as a defaulter when we are paying these considerable sums as token payments, we had not better—as is my own opinion—stop paying this £3,000,000 token to the United States.
The month of September, 1931, was for those of us who were in the House in those days probably the most absorbing and anxious month in the whole of our Parliamentary lives. Had we been able to look forward for just two and a half years and see the Budget which the Chancellor opened on Tuesday last, many of our anxieties would have been relieved. To my mind, the country as a whole does not appreciate in the least what has been done as regards our credit throughout the world during these last two and a half years. One has only to look abroad—to see in Italy at this moment cuts here and cuts there; in France exactly the same trouble; the grievous trouble of the United States of America—to realise that this is not yet world recovery. I wish it were. It is, however, a recovery by this country in a way in which no other country has been able to recover. For that we have to thank the National Government, and we hope that they will see that, between now and the General Election, these important facts are put abroad, so that the country realises what has been done by my right hon. Friend who sits in front of me.

7.9 p.m.

Mr. MAINWARING: I want to make a few comments on something which was said by the Chancellor of the Exchequer in his Budget Statement on Tuesday evening in reference to the reduction of Income Tax. He said:
One must not forget that since 1931 many of these Income Tax payers have also suffered a further serious reduction in their incomes owing to the operation of the Conversion Loan."—[OFFICIAL REPORT, 17th April, 1934; col. 925, Vol. 288.]
It is those significant words upon which I want to comment. Apparently, the Chancellor is now introducing what I should regard as a compensation theory for losses of income. Independently of any other consideration, the implication is that because the Income Tax payers have lost income on account of Conversion, then for some reason or other it
becomes necessary for the Government to consider by what manner of means they can now replace the lost income of these people. This attitude, indeed, is remarkable in so far as we have just entered a period of silence after a very long period of strenuous agitation around this question of money and currency. The year 1931 was a fateful year in connection with these matters. It was one in which a report was submitted to this House by the Commission which had for a considerable time been investigating trade, financial and other conditions in this country and had been arriving at a determined financial policy. Among the matters emphasised strongly in that Commission's Report was the change of the incidence of purchasing power in the War period and the period subsequent to the War, more particularly the inflation period, resulting in decling purchasing power in the unit of money in the one period; and in the second period of a return towards the Gold Standard and an increasing purchasing power in the unit of money.
This Commission emphasised strongly the effect of this movement of purchasing power upon the division and the redistribution of the national income. They took great care to point out that in so far as the wages of the working classes of this country had not fallen materially from—if my memory serves me correctly—the year 1924 to the year 1929, the working classes had been benefiting by receiving a much larger share of the total national income. The same thing would apply to the receivers of the interest upon the moneys loaned to carry on the War and for other purposes. The report pointed out that this situation, the redistribution of national income to the benefit of the working classes and the rentier class, left the capitalist class with an insufficient inducement to remain capitalist, and the necessity now arose for changing the movement and giving it a new direction.
The Commission entered as a result into the ways and means of effecting a new distribution of income, and they even went so far as to consider whether it was a practical policy any longer to enforce lock-outs and strikes upon the working classes in order to reduce their wages. The suggestion was immediately tabooed by the Commission; they pointed out that there were much more effective
ways for the Government to employ in this direction. One of the means they suggested was a changed money policy, the implication clearly being another change in the purchasing power of the unit of money. This was intended to have the effect of reducing, now, the purchasing power of wages and even of reducing the purchasing power of interest on money. The Government—and this is the strange thing that has happened to-day—as a result of the Conversion policy to which reference has been made, have succeeded in reducing the rate of interest to these bondowners in this case, and they now deem it necessary to find a new compensation policy for them.
I wonder if the Government are also prepared to consider in this Budget a new compensation theory for the loss of wages of the working classes in the same years. I wonder if that will enter their consideration. Or, suppose that the Government had in fact succeeded, as a result of going off the Gold Standard, in raising the general level of wholesale prices and subsequently of retail prices in this country with, in consequence, a reduction in the purchasing power of the wages of the working-classes, would they in face of that fact have introduced a compensation theory for the working-classes? It is not at all likely. That was an astounding declaration to come from the Chancellor of the Exchequer, that he thinks it necessary to compensate the holders of given bonds because he has succeeded in converting the original interest to a lower level.
The right hon. Member for Hillhead (Sir R. Home) commented very favourably on that, but he went a step further. He begged the Chancellor of the Exchequer to make a declaration of his financial policy. He pointed out that the world had become involved in world-wide trade depression and that the prices of primary products had fallen from a fairly high level to an exceedingly low level. The prices of agricultural produce in America for example fell to one-third of the price at which they stood at the peak, with the result that the agricultural population lost two-thirds of their income. This reduced their purchasing power in regard to the buying of manufactured products in general. That is a
clear statement of the effect of trade depression, resulting in a fall in purchasing power. The right hon. Member for Hill-head went on to point out that in America they are gravely considering new financial policies that may serve to relieve that situation.
Up to the moment, although there have been no clear signs of success yet, the policy that holds the field in America is to raise purchasing power by the modification of the currency system. As the right hon. Gentleman rightly pointed out, they are to make more dollars out of an ounce of gold than before, with the result that the obligations of the moment will still be counted in dollars although they will be paid in the new dollar instead of in the old dollar. They will be paid in light dollars instead of heavy ones. Whoever holds any obligations in terms of money will therefore find it easier to pay his debts. His obligations will be more easily met, provided they succeed in raising prices to the new unit of currency. The right hon. Member for Hillhead wants to know if there is any danger of that policy becoming operative in this country and, if so, will the Chancellor of the Exchequer confer upon him and his fellow business men the boon of letting them know beforehand when he is going to do it. If the right hon. Gentleman himself were the Chancellor of the Exchequer at this moment and I asked him if he would kindly tell me the principles upon which he intended to operate the monetary policy of this country, I wonder what his reply would be. Obviously, I should be delighted to be informed and so would any other person be delighted if the Chancellor of the Exchequer would say when he is going to introduce the change. If the Chancellor of the Exchequer is to enlighten the business men of this country as to precisely what he may or may not do in relation to financial policy, will he also be good enough to inform the working classes? Will he let the trade unions know? Will he let us know at what period it will come about when, in the not far distant future, we shall have to decide, as I have no doubt we shall, the gold content of the British sovereign again. That will have to be done, and when it is done I should like to know at what weight of gold it is going to be determined.

Mr. BOOTHBY: Everybody would like to know that.

Mr. MAINWARING: That is what the right hon. Gentleman the Member for Hillhead begged for. He asked to be informed beforehand. When that is done the Miners' Federation will also be interested, because we shall want to estimate precisely the amount of the wages of which the (miners have been robbed, how much they are likely still to be robbed, and what increase we shall have to ask in order to remain where we are in relation to the cost of living. All these considerations will arise immediately. It is really astonishing that business men in this House should be able calmly to invite that sort of knowledge from the Chancellor of the Exchequer, presuming, I suppose, that he is acting not in the interests of the nation as a whole but in the interests of private capital. To a certain extent I am prepared to say that he does that. Obviously, in the remark that I have quoted from the Chancellor of the Exchequer about the Income Tax payer, he was interested in what happens to that special branch of people, and I have no doubt that he was perfectly honest and sincere when those words dropped from his lips. He spoke of the readiness of the nation to make sacrifice in the time of emergency, but I suggest that the nation he had in mind did not include the working class. The nation he had in mind was the nation that is always in his mind, the business nation, the Income Tax payer. Having recognised, therefore, that the tax-paying section of the nation has made sacrifice, he is going to compensate them.
If the right hon. Gentleman wishes to get the credit of having thought for the whole nation, an undivided nation, when he thinks of compensating the Income Tax payer for the loss of income because of the conversion of Government securities from a higher to a lower rate of interest, may I tell him that one million miners in 1920 had probably somewhere about £5,000,000 a week in wages, but to-day 750,000 miners will have less than £1,500,000 in wages, so that the miners have lost from £3,000,000 to £4,000,000 a week in wages since 1920?

Mr. BOOTHBY: The hon. Member must surely know that the pound in 1920 was much more inflated than it is at the present time.

Mr. MAINWARING: Yes, and the Chancellor of the Exchequer suggests that although a 4 or 4½ per cent. rate of interest has been converted to 3 per cent., the 3 per cent. purchasing power to-day is greater than the 4½ per cent. in 1920, yet, because the 4½ per cent. has been reduced to 3 per cent., he deems it necessary to compensate them. On the other hand, the miners have lost £3,000,000 to £4,000,000 a week in wages for 13 years, and there is no suggestion of compensation to them.

7.23 p.m.

Mr. PIKE: I do not propose to follow the hon. Member who has just resumed his seat in any financial analysis. I merely intend to detain the Committee for a few minutes to assume my right as a representative of a working-class area to express their views from this side of the House on the statement made by the Chancellor of the Exchequer last Tuesday. It is generally assumed that before one can utter any sentiments in this House which are in any degree representative of working-class requirements one must sit on the benches opposite, with the Opposition. I believe that the true sentiments and the true requirements of the working-class community find expression from these benches to a far greater degree than they can possibly find expression from the benches opposite. I believe it to be true that on this side some 14,000,000 working-class votes are represented while on the benches opposite, even if they mustered the numbers that they had in their brightest days, their total representation of working-class votes would not equal more than half that figure. I should regard any expression from the Socialist point of view as more worthy of a genuine point of view than I welcome the suggestion from the benches opposite that they and they alone can represent and do represent working-class opinion.
The working-man in this country for the last three years has been looking for some result from the National Government, and I suggest, without any fear of contradiction, that in this Budget he has got the result. Probably it is not the
result that he has anticipated to the extent of 100 per cent., but it is certainly a 100 per cent. result greater than he could have hoped for 12 months ago and 200 to 300 per cent. greater than he could have anticipated two years ago. That result has been achieved not because the Government decided to suppress his political opinions or to organise his political opinions in the channels that they particularly desired, but because the Government decided to sit down to deal with the problems of the nation and to look at them through national rather than political spectacles. I am a supporter of the Government in so far as I firmly believe that the result of their work is due to the fact that they have for the time being at least set aside any political ambition for the purpose of meeting a national emergency.
The Chancellor of the Exchequer told us that he owed the surplus to three main factors, beer, tariffs and Death Duties. We have heard a great deal from the other side during the past 24 or 36 hours in criticism of the Budget and the manner in which the Chancellor of the Exchequer has distributed the surplus. I ask hon. Members whether there is a single representative from the benches opposite who is prepared to go to the country, even in his own division, and declare before a body of electors that he is definitely opposed to the Chancellor of the Exchequer's statement on the ground that he is distributing his surplus unfairly and that he has received it unfairly. Two years ago when a proposition was made that the Chancellor of the Exchequer should reduce the Beer Duty, having regard to the diminishing returns from the Beer Duty, we did not see any enthusiasm from the other side to go into the Lobby with the Government. We did not see any enthusiasm on their part for a reduction in the Beer Duty. When it came to a question of voting on an Amendment which was really against the Government, the Opposition voiced their opinions and voted with a few rebels, if I may so express it, from this side, not in the interests of the people they represented, but because it was a vote against the Government, according to instructions from Eccleston Square.
This year, owing to the action of the Government last year, there has been a
surplus of £5,000,000 from Beer Duties over the estimate. I challenge any hon. Member opposite to come to my division, if he likes, and to tell the people there that that reduction in the Beer Duty has been at the expense of the unemployed, or at the expense of the women and children whose breadwinners are without the ordinary means of subsistence. They know that the increased revenue from beer has been achieved because of three things. In the first place it is due to the restoration of confidence in industry, which has led to an increase in the employment of the workers. Secondly, to give a small amount of additional pocket money to the consumers of beer by virtue of being in employment more frequently than during the past few years, and, thirdly, because of the fact that in the great majority of cases the beer which workers consume, whether in clubs or in public-houses, is regarded by them as an essential food or as an essential element in their ordinary daily diet. Will any hon. Member opposite go into any industrial division and ask for a restoration of the Beer Duty inflicted during the last Socialist Government?
Then there is the question of tariffs. Hon. Members opposite have gone into the Division Lobby with the right hon. Member for Darwen (Sir H. Samuel) whenever it has been a question of Free Trade versus Tariff Reform, and every one of them has spoken during the year against the Government on the question of import duties. They have voted for Free Trade through thick and thin as against tariffs. Is anyone of them prepared to come into my division, where over 13,000 men have found employment during the past 18 months as a, direct result of tariffs, and tell them that the present Government have to be cleared out because of their wicked, poisonous and robbing tariff policy? The hon. Member for Normanton (Mr. T. Smith), the hon. Member for Rhondda East (Mr. Mainwaring) and the hon. Member for Caerphilly (Mr. M. Jones) depend on coalminers' votes for their position in this House, and they know as well as I do that but for the policy of tariffs, on which the Chancellor of the Exchequer has relied so much for his revenue and his surplus, at least 25, if not 50 per cent., more persons would be unemployed in
their divisions than are unemployed at the moment.

Mr. MAINWARING: Can the hon. Member quote me any colliery in the Rhondda Valley which with a tariff has produced a single ton of coal more or employed a single man more in the last five years?

Mr. PIKE: I cannot, of course, do any such a thing instantaneously, but I am convinced from the returns that the position of the coalfields in Wales—I will not confine it to the position in South Wales—is infinitely better than it was when the party opposite were in power, and certainly better than during the past two or three years. And I claim that the major portion of that improvement is almost entirely due to the tariff policy of His Majesty's Government. I would remind hon. Members also that the tariff policy of the Government, much as they have voted against it, was given to them by the people at the last General Election, and by a substantial majority. I will not raise any argument at all on the question of Death Duties. The hon. Member for Caerphilly yesterday suggested that the Chancellor of the Exchequer at the back of his mind knew that he was going to get another £10,000,000 or £12,000,000 out of the same estate from which he got £10,000,000 last year. The hon. Member was stretching his imagination a little too far.

Mr. MORGAN JONES: I mentioned no figure whatever.

Mr. PIKE: I will quote what the hon. Member said:
May I say in passing, lest I overlook the point, that in the course of his speech the Chancellor estimated that he is going to receive less in the way of Death Duties. Does he not anticipate another nest-egg from the same estate? If rumour speaks truly, this estate is one of very substantial proportions. I have heard it estimated that it is worth between £20,000,000 and £30,000,000. If so, I would like to know whether the right hon. Gentleman does not anticipate that, when this estate is finally wound up, he will receive a further substantial sum in respect of it. That will be a nest-egg for next year's calculations."—[OFFICIAL REPORT, 18th April, 1934; col. 979, Vol. 288.]
If the Chancellor of the Exchequer is relying as much on Death Duties as the hon. Member suggests, surely he will not
regard it as another nest-egg unless it is £10,000,000 or exceeds that figure?

Mr. JONES: All I want to do is merely to controvert the hon. Member's assertion that I suggested a further £10,000,000.

Mr. PIKE: It does not appear in the OFFICIAL REPORT, and as I have to take the OFFICIAL REPORT as accurate I am prepared to stand on the quotation I have given. I ask the hon. Member, not that I want another interruption, I ask the Opposition generally, whether they would rely upon Death Duties alone, for the purposes of revenue, as a very substantial item in any Budget statement they might make in the future if they were in power? If revenue is to be got through the medium of taxation, it is far better to rely on the taxation of those that are living than on those that are dead, and if hon. Members opposite, when they were in power had relied on living instead of dead factors, and drawing the conclusions which produced their Budget statements, it is possible that we should still be in opposition, and that I should never have been here. I am sure that hon. Members opposite will think that that would have been a national asset.
We had a most remarkable statement last night from the hon. Member for Ebbw Vale (Mr. A. Bevan). He suggested that the relief which the Chancellor of the Exchequer was giving by the restoration of the cuts was no relief at all and that when analysed it was rather a form of robbery of the worst paid section of the community; a worse form of robbery than had ever taken place before. He attempted to secure support for the suggestion that no restoration of cuts could possibly take place until the means test, or the needs test, was abolished. Is that a fair proposition for any Member of His Majesty's Opposition to make? After all, they were close partners with us in the introduction of the means test. In fact, it was from their mentality that the means test originally sprang. The hon. Member for Caerphilly can nod or shake his head as much as he likes, but he cannot get away from the fact that when it came to a question of the Socialist Government deciding what economies should be effected in order to remain in office, an estimate of economies amounting to £66,000,000 was consented to by the majority of his party. He knows, for
instance, that they decided upon an economy of £9,000,000 in the Defence Services, £10,700,000 in the Education Vote; and I would remind the Committee that this £10,000,000 included a cut in teachers' salaries not of 10 per cent. imposed by the National Government but of 15 per cent. It included also an economy of £700,000 in health, affecting doctors' salaries mostly.

Mr. E. WILLIAMS: Will the hon. Member allow me?

Mr. PIKE: No, I cannot give way again. I have given away too much of my time already. Altogether, until we come to unemployment, economies of £34,000,000 were suggested which could be effected without any great injury to the community, and all, when analysed, would have fallen on the poorest taxpayers of the country.

Mr. E. WILLIAMS: May I interrupt the hon. Member?

Mr. PIKE: When I come to the unemployment cuts, it was said that so far as unemployment contributions are concerned, £10,000,000 was a fair economy to make.

Mr. MORGAN JONES: What are you quoting?

Mr. PIKE: I am quoting from a copy of "Finance and Taxation," which is nothing more than reproductions from the official report for 1930 and 1931. There was also a saving of £3,000,000 to take place under the Anomalies Act, which hon. Members opposite want to forget. Is it a bad electioneering Bill? Is it something to be ashamed of? If so, why not say so? The Anomalies Bill was their child, and having produced it they did not even, have the decency of parents to rear it. Now it has grown up, and they are ashamed to recognise it as their offspring. Nevertheless, these are the cases upon which to-day they base the whole of their platform policy and propaganda throughout the country. If any hon. Member wants to convince this House and the country that the workers are not getting any benefit from the Budget, let them go down into the constituencies and debate the issue, not on the theories of Earl Marx or Ruskin College or Eccleston Square, but on the basis of facts, and in that case I am convinced that the vast majority of the workers of the country will recognise that at last
they have received by this Budget a large measure of support.
We have heard about the benefit it will not bestow. Suppose it is only £4,000,000 or £4,500,000, I do not believe there is an hon. Member opposite who will say that the money will not go into the right quarters. We have heard many pitiful stories of the plight of certain families, and no one has voiced more volubly than I myself what I regard to be the pitiable condition of certain cases in my own constituency. It will be generally agreed, however, that the £4,000,000 or £4,500,000 will go back directly to industry. I hope it will mean more milk, or bread, or meat, or clothing, or shoes, for the children and their parents. I believe we can rely on the fact that it will mean that, and in so far as it will mean that, hon. Members recognise that it cannot possibly mean that without also meaning an increased demand for the goods consumed upon the markets from which they were taken, and in consequence an increased demand for the labour that produced them, and so it floods back into industry. If you are prepared to apply that issue—and I can see by the general assent and nods of the heads of hon. Members opposite that they are—to those who are going to get it in the form of 2s. 9d., why are you not prepared to apply it to the person who receives 6d. in Income Tax relief? Is it assumed that the person who is receiving that relief will put it in a stocking or an old coal box and hide it in the cellar for fear that the Income Tax collector might come around and see if it is entered in his banking account? In my opinion the vast majority of these reliefs will come back into direct productivity, because first and foremost they will be expended on direct consumption. While I believe that the Chancellor of the Exchequer has under-estimated his returns for next year, I believe he has done so wisely and that we can look forward with greater expectation to a surplus even than we were able to look forward to one this year.
I think it is only due to me that I should refer to a very unfair statement that was made in this House last night by the hon. Member for Caerphilly, who alleged or was responsible for it being alleged that he had suggested that he based his assumption on a statement
made by the Prime Minister. On referring to the OFFICIAL REPORT I find that the real statement that he made was:
In view of the very explicit undertakings given by the Government then and since, I charge them with a definite breach of faith in this matter. They have not carried out their pledges. They told these people plainly that the cuts were only to be temporary and that, when restoration came, it should come first in respect of the unemployed cuts and the restitution of payments."—[OFFICIAL REPORT, 18th April, 1934; col. 989, Vol. 288.]
I think the hon. Member for Caerphilly knows now that that statement was not justified. Even though a Member of the Cabinet, since passed, may speak in the country and give information to a Member of this House, that is what he really meant when he said something else. I really believe that what was said by the Prime Minister at Seaham in February of this year, and what has been said by a majority of Ministers throughout the country, is that when there was a sufficient surplus, that surplus should be spread according to the sacrifice's that were made. I think it should go out to the country and be known as definitely as possible, whether it be by those interested in transitional payment, Poor Law relief, full wages, or even returns from investments, that the policy of this Government in respect to cuts is as stated by the Prime Minister and as put before the Committee by the Financial Secretary to the Treasury, namely:
Make no mistake about it. We are not going to favour one class of the community against another. It was an equitable distribution and as we were all partners in bearing so shall we be partners in sharing. The partnership in distress shall be continued in restoration.
In the event of any hon. Member opposite desiring to go to Basingstoke or Hammersmith and repeat the alleged statement of the hon. Member for Caerphilly, I would warn him that up to the moment I have nothing to do after I have finished speaking to-night and that I might be available. On the other hand, the means test cannot be abolished. No party opposite can abolish it, and no party opposite would be wise to abolish it. I believe the means test operates as fairly against those whom we usually call the "haves" as against the "have nots." There are specific cases which we can always individually bring to the notice of the Ministry, but in the majority of cases, apart from what we might call
those that have been affected worst by its administration, in my opinion—I say it in Attercliffe, so I can say it here—it is the fairest and most honest piece of legislation that has been placed upon the Statute Book of this country for many generations.
Might I ask the Government to give me a little consideration for one or two appeals that I would like to make to them? The hon. Member for East Fulham (Mr. Wilmot) last evening made an extraordinarily passionate appeal for the small middle-class worker. I want to add to that appeal. I am not asking the Government to stop at the man earning £500 a year. I am asking the Government to consider the man earning £300 a year. This class of man is unquestionably the backbone of the country. He brings his children into the world and educates them as well as he can. He almost denies himself the privileges and pleasures that are enjoyed by the average industrial worker in order to do what may be regarded as the decent action of a man holding a fairly decent job. These people develop into civil servants, into the people on whom the nation relies in times of emergency, and, as has been truthfully said on many occasions, they are the people who in this House receive the least attention. I admit that this Budget will considerably ease the family man with up to £450 a year; I believe as a matter of fact that the man with two children and with up to £400 a year will almost be exempt from Income Tax altogether. At £450 he will have very little to pay, but beyond that figure there is still a very big burden resting upon his shoulders, and I would ask the Government to consider his financial worth to the State from the point of view of his full economic value to the State from one year's end to the other. If they do that, I believe they will find every good reason why, as a class, they should be placed now upon a more equitable basis as compared with the others.
I have only one more point to put. We have had a lot of criticism because the Government decided to reduce the motor tax, which does not amount to much. I suppose that is going to another rich class, but in Sheffield we produce steel tyres, chassis, frames, bodies, axles and bars. Almost every part of a car can be produced in Sheffield to order, and I
might say that until the duties were imposed on foreign importations, thousands of men normally employed in this industry were unemployed in Sheffield. They have recently enjoyed better times, and I am convinced that this reduction in the duty will open out new channels for their industry and that the motor car, whether for commercial or private purposes, will be made available to much greater numbers. By making it available to a larger number, you must increase the demand for those commodities, and because it will increase the flow of industry and the general consumption of goods outside of that specific industry, I cannot see any other than good generally arising from that concession.
I should like to thank the Government, because I have been a victim of past legislation, for the concession that they have made in the surrender value of licences. That has been mentioned too little in this Debate, but it is a great concession that will be enjoyed in the majority of cases by little men earning their own living with a motor car that has been turned into a lorry, selling green groceries, coal, wood, and fuel of every description, doing all kinds of services that men now perform with a motor car that used to be done with a horse and trap. That will be a very great concession to those men, because it is usual that before the end of the year, for purposes of their trade alone, owing to a seasonal falling off in the demand for their goods, they have to surrender their licences one month before they are due. That restoration will be a great acquisition. On the whole, and on Behalf at least of the hardest hit area in Sheffield, I want to say to the Government, Thank you for a Budget that gives hope, that give us some return for the sacrifices that we have made, and that can inspire us to produce for next year even greater results than you have helped us to produce this year.

7.56 p.m.

Mr. BOOTHBY: I shall claim the attention of the Committee for a shorter period than has been occupied by the last speaker, but I wish to point out that I think all of us, on both sides of the Committee, can be agreed that the improvement in the general financial condition of this country, whatever may be said of
the methods which the Chancellor of the Exchequer has used to dispose of his surplus, has been nothing short of miraculous in the last two years. It is indeed the admiration and envy of the whole world. I do not think that the satisfactory financial position which we now occupy is an indication in any shape or form of what is known as the orthodox Treasury view. Our comparative prosperity dates, in my opinion—and it is an opinion from which I have never swerved—from our departure from the Gold Standard, which was forced upon us, but which proved to be one of the best things that ever happened to this country. Since then sterling has been allowed to find its own proper level in relation to other countries, and money has been cheap and abundant. That policy, which has been consistently followed by the Treasury since we were forced off gold, led immediately to the great conversion scheme, which really is at the root of our satisfactory position to-day.
For his financial policy, which he has pursued with absolute integrity and determination, and which has delivered us from the curse of continuous deflation, the Chancellor of the Exchequer deserves very great credit. Cheap and abundant money has been the basis of it, and I believe that in the long run it will prove to have been amply justified. A policy of deliberate expansion we do not expect from him, holding the views that he does, and we certainly did not expect it in this Budget. But I think it will be forced upon the Chancellor of the Exchequer by circumstances which even he cannot control. Holding the views that we know him to hold, he was bound at this time to be cautious, and within the limits that he has himself imposed, I think the right hon. Gentleman has produced a very good Budget indeed.
The restoration of the unemployment cuts was demanded and is welcomed by the country as a whole; the reduction in the horse-power duty, for reasons which have been well given by the right hon. Member for Sparkbrook (Mr. Amery), seems to be admirable and most beneficial to the motor industry; and the 6d. off the standard rate of Income Tax is, in my opinion at any rate, incomparably the greatest stimulus that could be given to industry with the amount of money that was made available—much more so than by the restoration of the allowances on
the lower rates of Income Tax, although that might have been, from the humanitarian point of view, more valuable. I do believe that the psychological effect of a reduction in the standard rate of Income Tax, its stimulating effect on industry, is quite astonishing, and that in itself is not properly appreciated by some hon. Members opposite. There is no way in which you can give a comparable stimulus to industry with a sum of about £20,000,000, represented by 6d. off the Income Tax. That is the sole justification, but ample justification, for it.

Mr. E. WILLIAMS: Unless it is possible to increase the purchasing capacity of the people how can they absorb the increased products of industry?

Mr. BOOTHBY: It is a long story, but I could argue that 6d. off the Income Tax does definitely increase the purchasing power of the people. It certainly employs more people, because it stimulates industrialists to embark on enterprises that otherwise they would not undertake. I am a great believer, as well as my hon. Friend, in the restoration of purchasing power. All of us are rather sorry that the Chancellor could not see his way to reduce the Entertainments Duty, and I find the failure to do anything about whisky very disheartening indeed. It is not really a question of policy. It is a question of justice. If hon. Members will examine the Whisky Duty they will be amazed by it. There is no other commodity which is taxed in anything like the same proportion, whether it comes from abroad or not. It is the most savage imposition of modern times, and it is the view of Scotland and of one of our national industries up there that something approaching equity should be put into operation with regard to this duty. No commodity ought to be taxed to an extent that is palpably unjust and unfair. The duty is out of all proportion to any other duty, and I would like to see it reduced, even if it necessitated putting a higher duty on some of the wines that are now imported.
But this is my main point: I come to the chief defect in the Budget, and in my opinion it is a grave one. It has been referred to by my right hon. Friend the Member for Hillhead (Sir E. Home), by my right hon. Friend the Member for Sparkbrook, and by the right hon. Member for Darwen (Sir H. Samuel). The
Chancellor of the Exchequer has overtaxed the people of this country by just over £30,000,000 during the past year. What use is he making of the money? The redemption of Debt. What good will that do? As much good as spitting in the sea. It really is absolutely useless, at this juncture, to add £30,000,000 to the general reduction of our national indebtedness for all the effect it is going to have on the national credit. I invite hon. Members to consider the story of these allocations to the Sinking Fund and Debt redemption since the War. The more we did it the more we deflated, and as we put this money into the Sinking Fund year after year between 1924 and 1929 so we gradually increased until we doubled the real burden of the National Debt.
At the present moment I think that this particular surplus might well have been devoted to a much better and more important purpose. In my opinion, it should have gone to the Unemployment Insurance Fun to reduce that debt. I beg the Financial Secretary to the Treasury to take this point seriously. This House and this Committee do count for something. The hon. Gentleman has been urged to take this question seriously from all sides of the House and by some of the most influential Members of every party in the House. There is a tremendous chance for not saddling insured workers in future with the cost of paying, not even for the insured unemployed of the past, but those on transitional payment, largely owing to the muddling of successive Governments. It is not fair to impose this burden on the insured workers in future. I would like to see the Treasury shoulder the whole of this debt of the Unemployment Insurance Fund.
But at least this surplus ought to be applied to a worthy objective, for instance, to secure a reduction of the contribution both by industry and workers to Unemployment Insurance, and, perhaps more important, the raising of the children's allowance, about which we have already had several Debates. I believe that the House feels keenly the injustice of saddling the Insurance Fund with this debt. Hon. Members in all parts of the House would thankfully see the Treasury take over this debt. At least if the Government are not prepared to do that this year, I beg the Financial Secretary to draw the attention of the Chancellor
to the desirability of reducing the debt by the surplus of next year. That is where the surplus will do real good. Applying it to Debt redemption I do not believe will do any good at all. It is not required to enhance the credit of the Government at the moment. Apart from this criticism, I think that the Chancellor of the Exchequer is absolutely right in maintaining the credit of the Government at the highest level possible. He said in his Budget speech, and the right hon. Member for Darwen drew attention to it:
The improvement will come in later when as I foresee, I shall be very glad of it in order to meet the inevitable additions to our expenditure."—[OFFICIAL REPORT 17th April, 1934; col. 917; Vol. 288.]
The right hon. Member for Darwen said that that statement was received with alarm and despondency. Not by me. I believe that expenditure is inevitable, and not only inevitable but thoroughly desirable, and I believe it will come even sooner than many of us anticipate. It will be capital expenditure. It will be expenditure on distressed areas. It will be expenditure on housing and shipping and allotments and on many schemes which have been urged from all quarters and which the Government intend, I believe, to tackle seriously. It will involve expenditure on defence as well. I would very much rather see it undertaken by way of loan than by expenditure out of current revenue. The demand for these things is becoming steadily irresistible, and I believe that the Chancellor of the Exchequer knows it. He has made it possible, by his financial policy, for the Government of this country to raise loans for the purpose of development at 3 per cent. or something under, and we shall therefore get, as a result of the policy of the past, all the benefits of sound finance and of a big expansionist policy. I believe that if the Chancellor will go ahead, when the time comes, with this expenditure by way of loan, the whole of the financial policy that he has pursued with such determination during the last two years will have been found to be fully justified.
I had intended to plead for a more ample use of the tariff as a weapon of Protection against the quota system, which I do not think is working very satisfactorily. I simply want to say that we are conducting a great experiment in
Protection. It is no good hon. Members opposite pretending that economic nationalism is to die down in a year or a month. It is not. We are in a period of economic nationalism, and we must inevitably cconduct a great experiment, and we ought to be able to discard the methods that do not work and make the fullest use of those that do. The tariff has proved to us that we have a most effective, a most fair and a most flexible method of operating Protection. Certainly in my own constituency, which is largely concerned with the production of beef, the quota policy has not been of the slightest use. I believe that even from the point of view of negotiation with foreign countries the tariff is a much simpler weapon, and in a complicated world there is no use being more complicated than we need be. I therefore beg the Financial Secretary to plead with the Chancellor to extend as much as possible and as freely as possible the use of the tariff in conducting this great experiment in Protection.

8.10 p.m.

Mr. BATEY: I apply to this Budget the standard that I apply to most of the Measures that come before us, that is as to whether it will better the conditions of the working class. I say that this Budget contains nothing to help the working class, either the employed or the unemployed. I was glad to hear some of the speakers to-day refer to the demand made by the employed workers for a reduction of their contributions to the Unemployment Insurance Fund. In 1931 their contribution was increased from 7d. to 10d. They were urged then to believe in equality of sacrifice. Without complaint they consented to their contribution being increased by 3d. a week. It was an enormous increase, but they submitted quietly. When the Chancellor had an opportunity of doing something to help them they got no relief from the Budget. When the Chancellor was reducing Income Tax I would have liked to have seen him remove those with the lower incomes who were brought within the Income Tax limit in 1931. A lot of employed workers were brought within the Income Tax limit in that year. To-day when other people are receiving relief they are entitled to expect relief too.
Not many weeks ago a man working in one of the collieries in Durham stated that he had been summoned for non-payment of his Income Tax. He really could not afford to pay the tax. Though he made a fair and decent wage he had a brother who was in receipt of unemployment benefit. That brother came under the means test, and because my informant was making a fair and decent wage his brother's transitional benefit was substantially reduced. Yet in spite of that fact this miner was summoned for non-payment of Income Tax. This class of worker, who was brought within the Income Tax limit in 1931, had a claim for relief before anyone else, in regard to Income Tax.
After the Chancellor's Budget speech the impression given of that speech throughout the Press was that the cuts of the unemployed under the Insurance Fund were being restored by the Budget. They are not. The Minister of Labour, or the Chancellor of the Exchequer, or the Financial Secretary to the Treasury, could have made a statement last week or last month or indeed six months ago announcing the restoration of the benefits to the unemployed. That matter had nothing to with the Budget and it is difficult to understand why the statement was kept back to be made by the Chancellor of the Exchequer on Budget day. As has already been pointed out from these benches, not one penny of that money is coming from the Treasury. It is all coming from the Unemployment Insurance Fund. The Minister of Labour said only a week ago that the balance of income over expenditure in the fund was equal to £16,000,000 a year, and if that is so, the unemployed who are on the fund were entitled to expect the restoration of their cuts months ago, and not in July. But, we are told, the Chancellor of the Exchequer is providing £3,500,000 for the unemployed to come under transitional payments.
The Chancellor said on Tuesday that the unemployed cuts would be restored on 1st July provided the Unemployment Bill became law in June. That was as much as to say to the Opposition, "If you do not allow the Unemployment Bill to get through by June, there will be no restoration of cuts in July." But when the Bill is passed in June it will abolish transitional benefit. At present a man who has had his 26 weeks on the fund
and who comes on to transitional benefit has a claim to that benefit apart from the means test, apart from the family income, equal with the claim of the man who is receiving benefit from the fund. Once this Bill passes there will no longer be any claim on the part of such a man to transitional benefit. We have been told during the discussions on the Bill that he will receive according to his need from the Unemployment Assistance Board and that he may in certain circumstances get more than he gets at present. But that statement also implies that he may get less. The statement about providing £3,500,000 for those who come under transitional payments is to my mind merely eye-wash.
I confess that if I had been the Chancellor of the Exchequer my first care would have been for those unemployed men who through the action of the Government have lost such things as medical benefit, the right to maternity benefit for their wives, and old age pension rights at 65. There are men who are being deprived of these benefits through the action of the Government, and for whom the Chancellor of the Exchequer could have done something. When these men were being kept in benefit the Government were providing £750,000 for the purpose. Now the Government in order to save that sum have put off this very worthy class of people. As the Parliamentary Secretary to the Ministry of Labour told us on Tuesday, the Government have deprived 125,000 of the unemployed of medical benefit and these other benefits to which I have referred. There was a chance for the Chancellor to show some generosity. These are the people who had the first claim on him. The part of the unemployed who should next receive consideration from me were I in the right hon. Gentleman's position are the men who come under the means test. I hold that the means test ought to be abolished. Somebody recently put it to one of my colleagues, "Would you abolish the means test?" There is no question as to that, so far as some of us are concerned. We would abolish the means test, root and branch. It is one of the most degrading and meanest things of which a Government could be guilty, and so long as it exists there is no use in the
Government making any professions of interest in or desire to benefit the unemployed. The third section of the unemployed for whom I would do something are the men who are on the Unemployment Insurance Fund.
Even more than the restoration of cuts there is something which the Chancellor might have done and which would have helped the working class. He closed the financial year with a balance of £31,000,000. That, in my opinion, is not a credit but a crime. The Chancellor and his officials ought to have known months before the end of the financial year that they were going to have a substantial balance. For 12 months past we have pleaded with the Government asking them to find money to start new industries in the depressed areas. The Government always replied that they had not the money to do so. My regret is that this £31,000,000 was not used for that purpose. I agree that if the Government would not use the money to start new industries they ought to have used some of it at any rate to help the unemployed who are on transitional benefit, but I consider that the money ought to have been used to provide work by starting new industries. I believe there is no other hope for the distressed areas. It is the Government and the Government alone which can find the money to help those areas. It is no use waiting for private enterprise. If we wait until private enterprise is in a position to start new industries in those areas then the people there are doomed for years to come.
Having refused to use this money for the establishment of new industries, the Government come along to-day and announce that they are going to appoint commissioners to inquire into circumstances in the distressed areas—an absolutely ridiculous thing to do. The Commission which will go to distressed areas is a commission to inquire. If it had been a commssion for the purpose of planning new industries it would have deserved more support. But why talk to-day of seeking for information and making inquiries in our distressed areas of Durham and in the distressed areas of South Wales and Scotland when the Government have all the information they need? Where will the information go when it is collected? It will go to the Cabinet, but in the Cabinet there sit two
prominent Members, the Prime Minister and the President of the Board of Trade, who know perfectly well the condition of the county of Durham. The sending of these Commissioners is a wicked thing which is done for the purpose of gaining time and putting things off and making an appearence that the Government are willing to do something while all the time they do not want to do anything.
It is a wicked thing to put off starting new industries by sending a commission to make inquiries. The position of our people is such that they cannot afford to wait. An hon. Member has said that this £31,000,000 surplus ought to have been paid to America. It could be better used in our distressed areas and ought to have been so used. I asked the Minister of Labour to-day how many men were out of employment in the county of Durham, and he gave me a terrible answer. He said there were on the fund 29,385 adults, and on transitional payments 94,274, making a total of 123,659. That was on 19th March. These figures portray a condition of things that is simply appalling. I also asked the Minister for the number of juveniles out of work, and he said that on 19th March there were 2,694 insured juveniles and 5,725 uninsured juveniles, making a total of 8,419 under 17 years of age. That is a condition of things that warrants those who come from the county of Durham saying that they cannot be satisfied with the policy of the Government and insisting that the Government should use whatever surplus they have in order to start new industries.
I believe that new industries can be started. I read somewhere to-day that a gentleman, speaking last night in London, said that by the extraction of oil from coal it was possible to use 10,000,000 tons of coal per year and employ 40,000 miners. It would gladden some of our hearts if anywhere near that number of miners could be employed, but the plant for the extraction of oil from coal can only be established if the Government find the money for this new industry. The prospects for the Government are so bright that they could find the money and ought to do it in order to help us in the distressed areas. There is nothing in the Budget that will be inclined to make the working-class throw up their caps and
shout for joy. It will leave the working class exactly where they were, and until we can get a Government who, when they are legislating and bringing in the Budget, will keep before their minds first and foremost the interests of the working classes, there will be no improvement in the position of the workers.

8.31 p.m.

Mr. NALL-CAIN: I was very pleased to hear the Chancellor of the Exchequer say that the surplus was to be used to relieve those classes who suffered most when the crisis was acute. We have just heard a speaker talking about the County of Durham. As I sit for a constituency in the North I know only too well the position of the depressed areas, and I do not think the hon. Member is really justified in saying that the Budget will not help those areas. I wish to comment on a few of the details of the Budget. The dole cut, as it was called, is to be restored On the 1st July, and I would like the Chancellor of the Exchequer to say what will be the appointed day for the Unemployment Bill to come into operation, because it is important for the depressed areas that, in addition to the dole being restored, the appointed day should be fixed as soon as possible. I calculate from what the Chancellor has said that next year there will be £3,600,000 additional for transitional payment, out of the Budget, and that out of the Unemployment Fund there will be £4,800,000 extra to make up the dole cut.

Sir STAFFORD CRIPPS: Not extra.

Mr. NALL-CAIN: Extra out of the Unemployment Fund. That means a total of £8,400,000. I am glad that the Chancellor has taken 6d. off the Income Tax instead of giving back the reliefs. It will be a great thing for industry and far more spectacular to have 6d. off, and I am sure that, although some people may not benefit from it as they would by giving back the reliefs, it will help very much more largely in the long run. A point made last night about the Income Tax is that the total produced by the taxpayer in the Budget of 1931 was £57,000,000, and the total which the taxpayer is given back is £20,500,000. That is considerably less than one-half, in fact, not very much more than one-third, and it is only right to point out, when people say that the Income Tax payer is
having all the benefit, that he is only getting back a little more than one-third of the additional taxation which was imposed on him in 1931.
With regard to motor car taxation, I was sorry that, when the Chancellor said that taxation was on a wrong basis, he did not depart from the basis of horsepower tax altogether. Instead of abolishing what he and many of us think is a wrong principle, he has now given us three-quarters of the wrong principle. I rather wish he had taken a new basis, either the weight of the car or the size of the car, or increased the petrol tax. Either of those ways would have helped the export trade more. On the other hand, I was rather sorry that so prosperous an industry as the motor industry was helped while we heard of nothing being done for other industries, such as the shipping industry, in which we are particularly interested in my part of the country.
To come to the surplus of which we have heard so much, I would suggest to the Chancellor that in addition to a profit-and-loss account for the year he should give some indication of the balance-sheet of the year. I think hon. Gentlemen opposite will agree that it is a fact that he has extracted £85,000,000 from the capital of individuals and has taken that into his revenue for the year. His surplus of £31,000,000 last year is applied to the reduction of debt—I am not going into the question of whether that is the best thing to do or not—and that leaves £54,000,000 which has been taken from the capital reserves of the nation—to use the language of a company meeting—and spent as income. There are many hon. Members who, whatever their views on Death Duties, consider that that is harming enormously the trade and industry and agriculture of the country. Since the War £1,000,000,000, roughly, has been taken by Death Duties. Not all has been spent as income, but a part of it. Taking a figure of 5 per cent., we might assume that £50,000,000 a year would have been produced by that money, and with Income Tax at 5s. in the pound, and an average of 3s. 6d. in the pound as Surtax, that would have produced £20,000,000 as Income Tax and Surtax, which would have been useful either for taking another 6d. off the Income Tax or for many of the other purposes for which
hon. Members would like to see it used. I really cannot agree—and I am
sure the Chancellor will agree with me in this, although the situation is most difficult—that with that amount of capital being taken every year any Budget is really sound. In introducing his Budget the Chancellor said:
Broadly speaking, however, I have considered myself precluded from considering other claims for relief, however well founded they may be, until something like the equivalent of restoration has taken place."—[OFFICIAL REPORT, 17th April, 1934; col. 922, Vol. 288.]
I take it that that statement will preclude him from dealing with Death Duties in this Budget, but hope springs eternal in the human breast, and perhaps in the next Budget he will not be precluded from dealing with them.
I will detain the Committee for only a few minutes longer in giving my views of what some Members of the Opposition may think. I have given my own point of view, and perhaps it is just as well to see how the Budget reacts on the Opposition. On Budget day it is the custom for leaders of parties to say a few words on the manner in which the Chancellor has presented his Budget, and as a humble back-bencher of the party may I say that I think he did it most admirably. But the Budget, as seen through the glasses of the hon. Member for Limehouse (Mr. Attlee), the acting leader of the Opposition, must have somewhat affected him, because he went a little further, and talked about the matter of the Budget. He said it was the meanest Budget on record, and I am inclined to think his spectacles must have Crooke's lenses or some lenses which do not allow the sunlight to percolate, because he went on:
We regard it as an insult to the unemployed, from whom millions and millions have been taken, that are being given, in exchange, only a few paltry words of thanks, a few words of insolence and £3,500,000 and told they must rest content."—[OFFICIAL REPORT, 17th April; col. 980, Vol. 288.]
If there is any insolence it was on the part of the hon. Member for Limehouse. I have seen the Opposition in various circumstances, but I have never seen them so quiet and so dispirited as they were over this Budget. The last time I saw them so quiet and so dispirited was when Lord Snowden, then Chancellor of the Exchequer, explained to them
all how their Cabinet had agreed to all the cuts and all the impositions of taxation which were carried out in the Budget of 1931, and which the present Chancellor of the Exchequer, through the policy of this Government, is doing his best to get rid of.

8.40 p.m.

Lord BURGHLEY: I will not keep the Committee for more than a few minutes, but there is one matter on which I should be interested to have some information from the hon. Member for Normanton (Mr. T. Smith). He said that the improvement in the figures of unemployment was due very largely to people being taken off transitional payment and thrown on to the Poor Law. If that be so I should be interested to know how he accounts for the very large increase in employment among insured workers, which has coincided with the fall in the number of unemployed among insured workers. I, too, would like to add my word of congratulation to the Chancellor of the Exchequer on his admirable Budget. It is just the type of Budget that we should expect from him—no gambling on the future, no attempt to curry popularity by over-estimating his prospective surplus. One item in last year's accounts to which I would like to refer has been referred to already by several hon. Members, and that is the particularly large estate on which death duties were levied during the year. I would ask hon. and right hon. Members opposite who are always so vociferous in their clamour to have the capital of the units of the State taken in order to be spent as income by the State, to bear in mind that, as a direct result of the heavy Death Duties levied on this estate, the Chancellor of the Exchequer must every year in the future count on receiving £200,000 less in Income Tax and Surtax. Admittedly that was an exceptionally large estate, but I think that what has happened in that case does bring home to us that this spending of an individual's capital by the State as income will, if carried to its logical conclusion, mean inevitably that the community with the smaller incomes must to a greater and greater degree be called upon to provide the wherewithal to balance future Budgets.
With the exception, possibly, of hon. Members opposite, who on these occasions show themselves rather like the
proverbial ostrich, which buries its head in the sand, I think all will agree that the Chancellor could not have spent his surplus more justly or to greater advantage as far as equity and advantage to the community as a whole—in particular through the expansion of industry—is concerned. There can be no one in the House or in the country who was not delighted to hear that the cuts on the unemployed, as regards not only insurance benefits but transitional payments, were to be restored in full. As far as the restoration of 50 per cent. of the other cuts go, I think it is common justice that, in equity, as large a percentage as possible should go to those others who suffered in the 1931 Budget. There are certain organisations in the country which, instead of showing any gratitude for this concession, are storming against the Government for not restoring the whole of those cuts. They would do well to remember that they have received back 50 per cent. of their cuts, whereas the Income Tax payers, who also subscribed in the emergency of 1931, are receiving back only 40 per cent. of the help they gave on that occasion. If they consider this matter for a moment they must agree that their complaint, so far as equity is concerned, is groundless.
I would like to say a word of appreciation to the Chancellor for taking 6d. off the standard rate of Income Tax. Not only will the £20,000,000 which that represents be spent as income or be removed as a direct charge upon industry in certain cases, but, what is even more important, it will be a tonic to industry and will contribute greatly to the confidence upon which industry is so largely dependent for its continued expansion and its power to increase and give more employment. It should not be forgotten that if the Socialist Government were still in office and were carrying on the same policy, so far from the Chancellor of the Exchequer having a surplus to distribute, we should be faced with a deficit probably in the region of £200,000,000, and the Insurance Fund would be hopelessly bankrupt. Hon. Members of the Opposition indulge in what I understand are called "ironic cheers." If they were still in office, many of them might be coming to me to ask how to become proficient in the sphere of activity of which I have some experience, in order that they might
escape from a very angry electorate. If they had been in office, the community would have been confronted with far greater hardships than those which were faced up to so splendidly in 1931.
It is very important that people should realise that the surplus is not a result of chance or luck, but is directly traceable to the actions of the Government. If the Budget had not been balanced, the credit of the country would not have improved to the degree which enabled the Chancellor to carry through his tremendous conversion scheme and save so many millions. If the Government had not changed their fiscal policy, not only would the Customs receipts now show an enormous reduction, compared with the figure which the Chancellor of the Exchequer gave to us the other day, but our internal trade would not have improved and expanded as it has done, and many thousands of workers would still be members of that tragic army of unemployed instead of being back at work, as they are. The National Government was returned to bring back better times to the country. The proof of the pudding is in the eating. I am satisfied that the Chancellor of the Exchequer has produced a very fine, first slice of a very good pudding which will be for the advantage of the whole community.

8.48 p.m.

Mr. LOVAT-FRASER: In a few minutes' talk I wish to bring forward an aspect of the Budget that I would press upon the Chancellor, and I am very glad that he is present here in person to hear what I have to say. I wish to refer to the tax upon theatres and entertainments in which the living voice is used, as distinct from entertainments which are produced by mechanical means. The Chancellor of the Exchequer said, in opening his Budget, that he had not seen his way to abolish the duty upon entertainments. I would appeal to him, in the interest of the theatre which is suffering very severely at the present time, if he cannot abolish the duty, at all events to reduce it. Even a reduction would be of some relief to those who are running our theatres. The Entertainments Duty was established in 1916 as a purely emergency measure. A great many people, munition workers and
others, were getting a good deal of money, some of which was being spent in the cinemas, and no harm was done by imposing a tax upon entertainments. That emergency tax has now been in existence for 18 years, and I urge upon the Chancellor of the Exchequer that the time has come, with the splendid results that he shows this year, for giving some relief to the theatre.
Since the tax was introduced, cinemas have enormously increased in number and have become a very serious rival to the theatre. The rivalry, coupled with the Entertainments Duty, has made the lives of those who run the theatres of great anxiety and hardship. The takings of the cinemas are enormous. It is said by the "Era" of 14th February that no less than £12,000,000 goes to America from British cinemas, and 12,000,000 people visit those cinemas every week. In London, Sunday receipts alone, in 1933, were over £800,000. The rivalry of that very prosperous form of entertainment should be taken into account in considering the position of the theatres. The managers of the theatres cannot raise prices because people will not pay increased prices, and the managers have to bear the tax themselves. The result is that they have been reduced to a condition in which large numbers of theatres will shortly have to be closed, if relief is not given. I believe that of the 700 theatres which were in existence before the War, no less than 333 have either been closed down or have changed over to a cheaper form of entertainment.
I make this appeal to the Chancellor of the Exchequer. One aspect of the Entertainments Duty that I particularly dislike it that it is a tax upon culture. Theatres are among the great cultural influences of the world, and it is rather melancholy at this time of day that in Great Britain we should be taxing this means of culture. Not very long ago it was my good fortune to stand in the great stone theatre at Athens where those immortal Greek plays, which are still read with delight by the modern world, were produced. From those days to these days the theatre has called forth the greatest intellects, and it is a sad thought that at this time and in this country, with our literary reputation, the theatres should be reduced to their present struggling condition by this tax.
I appeal to the Chancellor to consider, if not the abolition of the tax, at all events some reduction.

8.64 p.m.

Mr. E. WILLIAMS: With much in the speech to which we have just listened I heartily agree. In the general approach to the Budget there are two distinct points of view, which might be summarised as the deflationist and the inflationist points of view. The time has fully arrived when the Chancellor should approach the problems of this country from the latter point of view. At this late hour I do not propose to explain that unnecessarily, but it must be obvious to every Member of the Committee and to every economist in the country that there is no hope of obtaining prosperity for the people of this land unless a market is effectively created for the accumulating goods that are being produced. We know that the market has been satiated with over-production, causing an enormous amount of unemployment, and that nothing is being done to create the only effective remedy that could possibly exist, namely, purchasing capacity on the part of the common people in order to absorb the ever-expanding productivity of the land. I should have expected the Chancellor in his Budget speech, particularly when he referred to the restoration of the cuts in part—the 50 per cent. restoration to the police, civil servants, and others—to say, "Let me give this as a lead to the employers of the country," in order that employers throughout Britain might follow the lead of the Chancellor of the Exchequer, if only by restoring 50 per cent. of the cuts that were imposed in 1931. We know that the employers took advantage of the cuts imposed at that time, and that the market suddenly contracted, nationally and internationally.
We have heard much in this Debate about the good conduct of the Government, but I think it is patent on examination that two factors have led to the creation of that surplus. The one proves conclusively that the present Government were elected to power really by tricking the electorate of the country. I can speak of Welsh constituencies, and I have to presume that the same kind of propaganda took place in most of the constituencies in the country. It was necessary to elect a National Government in order to save the Gold Standard; that
was the slogan. But, within a few days after the National Government had been elected, they brought before the House a Bill, and within 10 hours a Bill was placed on the Statute Book enabling Britain to go off the Gold Standard. By so doing we obtained momentarily an enormous advantage in world markets. It was the positive means by which cheap money has come about; it was the positive means which made conversion possible; it was the means by which we were able to compete against America and other nations in the markets of the world. Every bit of prosperity that has come to this nation during the last two years—or rather, I would say, not every bit, because I do not want to exaggerate, but a substantial amount of the prosperity that has come to this nation—is attributable to that fact; and yet the Government had been elected to save the Gold Standard. Against its will, against its expressed purpose as contained in its own propaganda, it has arrived at what it conceives to be prosperity.
The other significant contributory factor is the enormous contribution that was made by the unemployed. During the last three years the unemployed of Great Britain have contributed no less than £59,000,000, and they are to receive a miserable £8,400,000 in return. Meanwhile, having arrived, as most hon. Members are pleased to believe, at the verge of prosperity, the Government still maintain what I think most fair-minded men and women in this country must believe to be the most mean and contemptible Measure that has ever been placed upon the Statute Book of this country, namely, the application of the means test for transitional payments to the unemployed. I want to indicate to the Committee the plight of Glamorgan, and my own constituency in particular, in that regard.
There has just been published by the public assistance officer for the county of Glamorgan an analysis of the application of transitional payments during the last three years. I will not waste the time of the Committee by giving many details, and particularly by giving too many figures, but I want to use just two sets of figures. We find that in 1932, of the persons who sought transitional payments from the public assistance committees, 92.8 per cent. had full determinations, while the number refused transitional payments altogether were roughly 2.8 per cent.,
and the difference between these two figures represents the number who received partial determinations. In 1933, we find that 96 per cent. of all those who applied for transitional payments in the county of Glamorgan received full determinations. What does that reveal to the Committee? One could advance no more conclusive evidence to prove that the people of Glamorgan to-day are destitute. There is not one single item of incomings to the home that can be taken into account in order to deprive these poor people of the full determination for transitional payments under the means test. Having reached that stage, I think one could take it from Glamorgan to Durham, Monmouthshire, and most of the counties in which staple industries have been badly affected, and it could be shown that, in the case of the poor people to whom the means test applies, and has applied since 1931, every additional bit of income that they may have had up to that stage has long ago been completely absorbed—that the means test has completely absorbed any small external aid that they may have received from any other source.
To perpetuate the means test at this stage, when the Government believe that the corner has actually been turned, is really committing a crime against very decent and honourable people in this country who have not been personally responsible for their present plight. To suggest the result of an economic blizzard, or any other term that economists or statesmen may use from time to time, as a ground for perpetuating this state of things, is really an act of cruelty against a very honourable section of people in this country. There is no reason whatever why the Chancellor could not have restored the cuts before Budget day. There can, in fact, be no legitimate reason at this stage, except that the Government desire to legislate upon purely class lines, for the Unemployment Bill being before the House. If the means test were abolished, the Unemployment Bill would not be necessary, for the obvious reason that the persons who come under Part I of the Bill are those who are to have their cuts restored from the Unemployment Insurance Fund.
It is the view of practically everyone who has addressed the Committee that the Chancellor has unquestionably underestimated his surplus. I wonder whether it is under-estimated in order that we may hear something in the autumn. Is an additional sum to be spent upon defence? From the inquiry which is being set on foot in the distressed areas, we understand that he is under-estimating in order that he may use some money to help the distressed areas. Is a substantially greater sum to be spent upon water supplies, upon housing and upon really constructive development work? Analysis of the figures indicates that the export market is contracting. One knows that it is impossible to square Ottawa with the policy of the Ministry of Agriculture. It will be very difficult to implement his policy and to save the Empire. That is evident in the conduct of New Zealand at this moment, and the Conservative party will be obliged to sacrifice either the Empire or agriculture. That is a matter, I presume, for the President of the Board of Trade and the Minister of Agriculture to fight out, but that contradiction has been revealed from day to day in the want of policy outside agriculture shown in many statements that have been made by the Government.
We could not get into a state of hysteria when the Government said the unemployment cuts were to be restored in full. In my constituency, two-thirds of the unemployed are upon the means test, and one cannot conceive of those persons receiving the additional 1s. 9d. if the means test is to be applied particularly when the new Bill becomes law, and the commissioner will have the right to decide what figures are to be paid in relation to the means of the householder. I can see no indication whatever that the people who come under the means test will have the 1s. 9d. applied to them, and, if they do not, it is not true to say that the unemployed are getting their benefits restored in full. After all, they are the people who have been hit the hardest, who are sacrificing medical benefit, maternity benefits, dental treatment and all the other features that the Minister of Health set about in his July Bill last year to deprive them of. We cannot possibly be elated over a measure of this kind.
A substantial portion of the £24,000,000 that is to be given to Income Tax payers will not go to purchase the things that the Lancashire people or the people in the coal areas could be employed to produce. If the Chancellor is not devising a policy which will give the greatest amount of work in areas which have been most badly effected, in the long run it will prove to be bad policy and very unwise government. I am happy that some of the unemployed are getting some consideration and that there is a partial restoration of the cuts. I am happy to know that anyone will obtain even that measure of relief, but really it is not honest on the part of the Government to deprive these people of such enormous sums of money and to place on them the severe hardships of the last two years when there is a sufficiency at their disposal to give them back in full all that of which they have been deprived. To give them just a little and to give the remainder to those who do not require it, who would merely use it for speculated purposes, would not use it to set industry on its feet, but would not use it for purchasing capacity as such, would merely aggravate the many evils from which the country is suffering. It is for those reasons that we are opposing the Budget, and we hope the Chancellor will meet the case, put particularly by the hon. Member for Fulham (Mr. Wilmot), of the enormous disparity with regard to Income Tax abatement and things of that kind. We should like the Chancellor to reconsider many of the questions which have been put to him.

9.14 p.m.

Sir ARTHUR STEEL MAITLAND: I have listened with interest to the arguments that the hon. Member has adduced, just as I did to those of the hon. Member for Gower (Mr. D. Grenfell). He is always so engaging that I find it difficult to pick a quarrel with him. At the same time, I think that both hon. Members, when they deprecated this relief from Income Tax and gave as their reason that the surplus should be devoted to increase purchasing power, have perhaps not quite understood what purchasing power means. May I cite this consideration, because it leads directly to the appeal that I want to make to the Chancellor of the Exchequer. I am all in favour of the restoration of the
cuts to the unemployed, firstly because it will relieve them from hardship. In the second place it is, by currency methods, increasing purchasing power. If the hon. Member will consult his advisers he will realise that at the end of a slump, or indeed in any question of a cycle of trade, there is an immense difference between money devoted to purchasing what we call consumable commodities and money devoted to what are called capital or production goods. A trade cycle is always distinguished particularly by the fact that these great staple or capital goods mark, by their behaviour, the great upswing of the boom. It is the falling off in those capital goods which marks the depression. If he will consult the Ministry of Labour, he will find the figures. I have analysed the figures for the United States of America, and there, while the ordinary consumption figures fell off in a slump by, at most, 20 per cent. the capital goods figures for production fell off by over 80 per cent.
If you want to stimulate trade and to improve employment, you need at the present moment, above all things, to stimulate the production of capital goods. That is what they have just recognised in the United States. While it is true that the relief to the cuts does, as a matter of fact, stimulate production, it operates on consumption goods principally. The great advantage—and I say it advisedly—of a remission of Income Tax is that it brings into play a much greater stimulus of investment in enterprises which involve a greater use of capital goods. From that point of view, it is an extraordinarily good stimulus to a general recovery in trade, with a recovery of employment generally for the population as a whole.
I pass from that to what it leads to, and it is here that I want to make a direct appeal to the Chancellor of the Exchequer. We all agree in this Committee that this country has suffered grievously from the slump. I want to stress to-night a point which I have not heard in the discussions of this Committee hitherto, and that is, whether we cannot prevent it happening again. If so, have we not to start, even at as early a stage as now, making preparations in order to prevent anything
so acute as this last slump happening again. Some of the heads of the central banks and other wise people are well aware of the influences which affect these booms and slumps. Everybody in this Committee on either side admits that the Chancellor of the Exchequer and the Treasury, together with the Bank of England, have recognised the influence of what we call open market operations and have used them in an extraordinarily skilful way in order to effect a conversion of the public Debt. If there is one thing which all the bankers will admit at once it is that, while they know how to use it for the conversion of the National Debt, the very A.B.C. of it is not known accurately to anyone for mitigating, much less for ironing out, a great boom or a great slump and for preventing all the suffering which is carried with it. What I wish to lay before the Chancellor of the Exchequer is that the way in which those influences act from that point of view is really not yet known. There is no reason why it should not be known in order to prevent recurrences of this kind in the future.
Take the slump in which we have just been and from which we are only just emerging. In the first place, we know that the bankers are very familiar with what are called open market operations that is to say, the buying of securities. By that they make credit cheap and trust that it will stimulate investment and recovery, and help commercially. But from the point of view of recovery, it is extraordinarily slow in action. It has taken two years really to stimulate recovery. You can bring water to the horse, but you cannot make it drink. Another point of peculiar importance in recovery from a slump and also in a boom that precedes a slump is the behaviour of what are known as these capital goods. We know, and every economist knows, their effect, but at present no one knows at what stage and how the effect is created. Surely, if we want to make things better for the future, it ought to be possible also to find that out. I believe that it is possible.
I will take another matter affecting the slump, which has been one of general interest during the last (month or two, and that is the possibility of public works
upon a large scale. I do not suppose that there is anyone in this Committee who did not read the articles of Mr. Keynes when he suggested that we should engage in a public works programme upon a large scale. Mr. Keynes is the arch-priest of one school of thought on this subject and lives in London, and the arch-priest probably of the opposite school of thought, Professor Hayek, is in London also, and they differ greatly from one another. But there is one thing which is quite clear. If anyone wants to have a real public works programme, it takes a good deal more than a year, probably two years, for it to come into effect. I have had to analyse what is happening in the United States. Last year a Bill was brought in and passed into law in June. One part of it said explicitly that employment was to be provided quickly, and they made a grant, according to the exchange, of between £700,000,000 and £800,000,000 for a public works programme. Such a programme, however, cannot be extemporized, that is a thing you cannot do. Half the contracts have not yet been let, and only a comparatively minute proportion of the money has been actually paid out in wages or material. If anyone wants to have a true public works programme—that is to say, not simply to spend money without results and burden the public debt in the future—it has to be planned a long time beforehand. The questions involved are firstly to get the engineering and other plans made in order to determine what works there should be; secondly, to see if they could be possibly postponed until a time of slump; and thirdly to know at what time during a slump they should be undertaken? It seems to be difficult, and yet I remember going fairly carefully through an extraordinarily capable and practical analysis of what was happening in one of the great cities out there, from which it appears that when it really was taken in hand and planned carefully it was something that might be done. At any rate, it seems to me it is a thing that is well worth consideration.
When we pass out of the time of slump, as we shall be passing soon, to a time of returning prosperity, and when we have the problem of a boom in front of us, the question will arise, just as it arose in
1929. Is this country or are other countries as in 1929 across the water in America going too fast? If so, how should they be checked? Again, all the people who have to deal with it know the different kinds of measures that can be used. There is raising the Bank Rate, with the difficulty of doing so in any one country, if it is not done internationally. Again, there is the use of open market operation of a different kind; that is to say, selling securities instead of buying them in order to reduce the amount of money, of credit, on the market. There is paying off debt, which is a deflationary measure and can stop the boom; or, again, postponing public works. I am only stating that those measures are known. No one, however, yet knows when such measures should be applied, why they should be applied, or exactly how much they should be applied. At the present moment, if they are applied at all, it is generally a little too late, and the stable door is open and the horse has trotted out before anyone actually tries to close the door. The high prices, of course, which exist in a boom depend on the amount of credit and of money that there is in the market, but they also depend just as much on the quickness of circulation of that credit. That is what is technically, I believe, known as the "velocity of credit." No one knows at what point—and that is the great cause of a boom—the velocity is getting too great. Just recently the Federal Reserve Board in America published a figure for velocity. It ought to be possible to construct a thermometer of credit, to know what degree of velocity is healthy and what is getting too high. Or, to change the metaphor, you ought to be able to put on the brake sooner and much more gradually, instead of waiting until you are right up against your obstacle and then jamming it on with a jar.
I have run through those matters very briefly indeed, in order to lay them before the Chancellor of the Exchequer and the Lord President of the Council. If anyone examined them, the first difficulty he would come across would be that the actual facts and data have not been recorded on which fairly certain conclusions could be founded. These facts could
probably be recorded, but up till now people have jotted down and recorded only those statistics which it was easy to jot down and not those which are most needed for a problem of this kind. I am speaking from memory, but I rather think that that is the conclusion reached by a very practical man, who is the best authority on these subjects that I have met. I would suggest, therefore, that this matter should be gone into. A person may say, "It cannot be done." If anyone says it cannot be done, I merely ask him to realise the implications of saying that it cannot be done. We are clearly getting over this slump, but, unless something is done to prevent others, all the signs go to prove that slumps in the future will not be less but more acute than slumps have been in the past. If, therefore, nothing is done, I make a present to the right hon. Gentleman who is going to speak after me of the suggestion that the capitalist system will then indeed be on its trial and will deserve to be so.
From my own point of view, I am not a pessimist and I am not a defeatist. I believe that it can be done, and it is for that reason that I would suggest that the Government should consider setting up once again the Macmillan Commission, or at any rate a Commission, which would serve under Lord Macmillan, of equal ability to the last. Everyone who has read that Commission's report—and it is not an easy document—will realise that the Commission did a magnificent piece of work in the first report that they issued. From this point of view, however, that report was chapter I of the series that was needed. It was a perfectly admirable chapter I, but what is needed now is chapter II, to examine the points that I have mentioned and some of the other kindred subjects and suggestions that have been made with regard to currency, that people have seen discussed in public or heard discussed in private. I venture to put this suggestion forward because I think that, if the Government could be persuaded to consider it, it would prove a great boon for the future and would show what is so seldom found in a Government; the active forethought that provides for and tries to prevent an emergency which is otherwise quite certain to arise.

9.32 p.m.

Mr. MALLALIEU: We have just listened to an extraordinarily interesting speech by the right hon. Gentleman the Member for Tamworth (Sir A. Steel-Maitland). I am afraid that I could not possibly rise to such heights in discussing questions so abstruse as the trade cycle. There is, however, one specific tax which has been dealt with in the Budget, to which I should like to draw the attention of the Committee for a very few moments. Before I do that, I should like to say how much I desire to be associated with the view that has been expressed by many right hon. and hon. Gentlemen to-day and yesterday, and most recently by the hon. Member for East Aberdeen (Mr. Boothby), as to the destination of the surplus. I feel most strongly that it would be desirable to use that surplus to relieve the Unemployment Insurance Fund of the debt instead of merely passing it on to the National Debt, as I suppose it will be passed on under the present arrangements.
The specific tax to which I wish to refer is the Fuel Oil Tax. I feel a great disappointment that the Chancellor has not seen fit to alter the tax on fuel oil. Last year he said that he had two objects in imposing that tax: first of all, to raise revenue, and secondly to protect the coal industry. There was only one question, he assured us, that we need ask ourselves, and that was the question: Is the imposition of this tax going to help the great British coal industry? He admitted that he had been approached by various industries—the coal industry itself, the gas industry, and, I believe, the railway industry—and he said that there was just this one question: Would it help the coal industry? In my submission, there was another equally important question: Whether any benefit that came to the coal industry would come directly at the expense of other industries which might use the oil—industries, so far as I can see, quite as moral to be carried on, quite as useful to the country in their creation of employment and in their giving of the goods which we need to the country, as the great coal industry itself.
He has, of course, succeeded in raising revenue to the tune of, I believe, £2,000,000, but I do not believe that mere fact is one of which he ought to be at all proud. In the first place, he is turning the Government into a sort of
implement to which traders and industrialists may turn when they wish to use it against their rivals; and, in the second place, he has very definitely penalised important and growing industries which have been growing up rapidly in the country during the last few years. I refer particularly to the Diesel engine industry and the oil-burner industry. The first was a preserve of Germany until not long ago, and the second was a preserve of the United States. It was only by the enterprise and courage of the manufacturers of this country that that position has been altered and we have built for ourselves an exceedingly strong position in the exporting trades for these two industries.

Mr. T. HOWARD: Because of the McKenna Duties.

Mr. MALLALIEU: On the contrary. It is due to a variety of circumstances, but largely owing to the enterprise of our manufacturers and the development in this country of Diesel engines for road transport and other things. It would be very advisable for the Committee to remember precisely what happened when Diesel engines were first introduced into ships. We in this country, producing as we do the very best coal for the purposes of making steel, turned our back on this new development, with the result that other nations stepped in and reaped very great advantage for the shipbuilding trades of their countries. Even now, when this country has at last turned to building Diesel engines for ships, it often happens that in the ships which are built in this country the Diesel engines are really foreign engines, built here under licence; all as a result of the policy of keeping to coal at any price.
In 1922 only 9 per cent. of the tonnage of the world had Diesel engines, whereas in 1932 the figures had risen to 42 per cent. During that period, while we were still looking to coal instead of looking to oil and the Diesel engine, our percentage of world tonnage fell from 70 to 30 per cent. Even now, as I have said, many of the Diesel engines put into ships built in this country are, in fact, foreign, but it now happens that we have secured a preeminence in the building of the lighter Diesel engines, and it is this pre-eminence in the building of those lighter Diesel engines which I fear may be lost owng to the imposition of the tax upon fuel oil.
All over the world there are at the present time developments being made in Diesel engines. Railways in many countries are taking to them, with wonderful results, results which are far more satisfactory than might come from mere experiments. It has passed beyond the stage of experiment in many countries, while here we are still looking to coal and to the older methods and, I fear, preventing the growth of industries in this country which would otherwise flourish extremely and far outweigh any possible benefits which may accrue to the coal industry.
So much for the actual industries which go to produce the engines and use the oil. As for the industries which use both the machines and the oil, the engines, the burners and the oil, I was going to mention shipping but, of course, shipping had good friends in the Government and shipping was exempted from this burden. There are, however, the metallurgical and glass industries which find it essential from the point of view of efficiency to use oil for their furnaces, in order to carry out some of their most important processes. To these industries the Chancellor of the Exchequer is saying: "You must go back to coal, or if you do not go back to coal you must pay 20s. 5d. a ton tax on the fuel you use." That does not seem to me very much more ridiculous than saying that every manufacturer must be charged so much per hour for every time he allows smoke to go out of his chimneys. In both cases employment is being given and goods necessary for the country are being produced, but in the one case the Chancellor of the Exchequer is fining the manufacturer 20s. 5d. a ton for the oil he uses.
The only suggestion that I would put to the Chancellor of the Exchequer is, that he should treat the manufacturers in other spheres just as he is prepared to treat the Admiralty. There was a most interesting discussion not long since on a Motion introduced by my hon. Friend the Member for Bodmin (Mr. Isaac Foot), urging the Government wherever possible to use coal in the Navy. The Government were highly sympathetic, but there were very striking statements in the reply which was made by the Civil Lord of the Admiralty. He said:
I am sure that nobody in the House, not even the hon. Member for Spennymoor (Mr. Batey) will dispute the view that
efficiency must be the paramount consideration.
Later on he said:
On the other side of the picture as has been pointed out for me by the hon. and gallant Member for Hertford (Sir M. Sueter) the positive technical advantages of liquid fuel are overwhelming."—[OFFICIAL REPORT, 12th March, 1934; cols. 117–118, Vol. 287.]
My prayer to the Chancellor of the Exchequer is this: "Do allow ordinary manufacturers in the civil sphere to judge for themselves what is the most efficient fuel." In that way only can they give the maximum of employment and have the maximum of efficiency, and be able to do for the country what we would all of us have them do. Not until they are given freedom to manage their own business in a sphere where they ought to be allowed to manage it, can true prosperity come back to the country as a whole.

9.42 p.m.

Sir S. CRIPPS: It is always very refreshing to hear the right hon. Member for Tamworth (Sir A. Steel-Maitland), who is an expert on Russian and American economics, in his gradual translation from the American to the Bussian attitude. Each time he speaks one seems to find him coming nearer and nearer to the true faith. To-day, he was very frank in, first of all, agreeing that in capitalistic trade you have a slump always following a boom and a boom always following a slump. He agreed that those slumps must inevitably become deeper and deeper as one proceeds along the way, unless some means of preventing the deepening of the slump can be devised in the sort of way that he sketched. The very sort of attempts to control the capitalist system which are being made in America at the present time show conclusively that controlled capitalism is an impossibility. It is a complete contradiction in terms, and it is a contradiction in economic theories as well.
There is one point at which I should like to take up the right hon. Gentleman, before coming to the more general matter, and that is as to which form of purchasing power is most required at the end of the slump period within the capitalist system. What we are considering at the moment is a Budget for a capitalist system and not a Budget for
a Socialist system. The right hon. Gentleman pointed out that at the beginning of the slump the fall in the manufacture of capital goods was far more rapid than the fall in the manufacture of consumption goods. He will also agree that the fall in consumption goods precedes the fall in capital goods, which then becomes a far more rapid fall than the fall in consumption goods and rapidly overtakes it and reaches a percentage very much greater. Just in the same way at the end of a period of slump an increase has to take place in the manufacture of consumption goods before you can get an increase in the manufacture of capital goods.
What are the capital goods required for? They are required for producing new consumption goods, and unless you can show a state of affairs in which there is a greater demand for consumption goods you will not be able to show a greater demand for capital goods. In fact, the present state of affairs, with oceans of cheap money floating about, shows that although there is every circumstance which should create the manufacture of capital goods, short of the Government stepping in and doing it themselves as in the case of the Cunard Company, there is not the stimulation for the consumption of consumption goods to lead to a fresh spurt in the creation of capital goods. Therefore, the right hon. Gentleman is wrong when he says that at a time like the present you should create a new consuming power in capital rather than in consumption goods. I think the circumstances, in the capitalist system, to be precisely and absolutely the opposite, and that certainly is the position which has been recognised in America at the present time, a recognition, unfortunately, with very little success because President Roosevelt, in spite of his struggle to increase consuming power during the last month, has discovered that while the total wages of the workers have gone up by 1 per cent. prices have risen by 3 per cent. and his consuming power has fallen by 2 per cent. That is not a very successful result. Indeed, I do not believe that any successful result is possible to any extensive degree within the profit making system at all.
Turning to the more general question, one of the difficulties of a Budget Debate is that it has to take the form largely
of a discussion of the accounts of the country divorced from the policy of the Government, even assuming, as I am doing, that the Government have a policy. Savings and surpluses or deficits are looked upon quite apart from the causes and effects of surpluses and deficits. A surplus will be hailed as an achievement simply because it is a surplus, and without any regard to the measures which have been necessary or the policy of the Government which lies behind the creation of that surplus. That is largely because of the form of procedure in this House, where the Budget is dealt with as an isolated matter in stead of merely as the financial side of the Government's annual plan for legislation, so that one can see the whole story in its proper perspective, the financial and legislative side interlinked as part of one complete plan. If we could do that we should get a much better picture of the meaning of the figures, put forward so attractively and concisely by the Chancellor of the Exchequer, in relation to the full legislative programme of the year for which he was sketching the financial position.
In the same way the distribution of the surplus, in which naturally everybody is concerned from the point of view of the interests they have most at heart, is looked upon very largely from the point of view of the taxpayer rather than from the point of view of the community as a whole. It is looked at from this or that point of view of the people who may or may not benefit by the particular incidence of the distribution of the surplus, or the taxation itself. It becomes, therefore, very often a mere Treasury or accountancy document rather than the embodiment of the policy of the Government. I believe it should set out and enable us to interpret the main objects which are sought in the economic development of the country. This Budget, apparently, has no conscious direction at all to the economic life of the country behind it. It is the effort of an accountant to bring out a favourable balance and please as many of his clients as he can by the distribution of the results of that favourable balance, rather than an effort to plan out the economic life of the community. The Chancellor of the Exchequer rather reminds me of a person who is the head of a household who proudly boasts at the end of the
year that he has saved money during the year, a thing about which many people would be glad to boast, regardless of the fact that the saving has been arrived at by keeping his children in serious want, by cutting down their education, by giving them the most atrocious housing conditions and by various other kinds of what we should call cheese-paring economies, but on the other hand, rather proud of the fact that he has managed to induce them to drink large quantities of beer and spirits and thereby increase the prosperity of the household considerably.
It is rather appalling to look back over the history of the last 12 months in this House and to recollect the constant pressure that has been put on the Government from all sides for the expenditure of comparatively small sums of money to meet what have been considered and accepted in some cases by the Government, as urgent national needs and to remember that in almost every case there has been the unchanging reply "we cannot afford it." All the time the surplus has been rolling up. When the moment comes for the rabbit to be produced out of the hat we find that it is very much larger than anyone ever thought, in fact, it has had a large family while waiting. The House must realise now that during all this process of time, when hon. Members have been pressing upon the Chancellor of the Exchequer these various urgent national necessities, that they have really been completely fooled by the Treasury and by the Chancellor of the Exchequer when telling them that they could not be afforded. Now we find that there is this £31,000,000 surplus, which might have been used during the period for many purposes for which hon. Members on all sides have claimed that it was necessary to use it. That is not wise financial policy; it is mere folly. It is not economy. It is a lack of vision as to what is wise expenditure, which is not to be confused, although it sometimes is, with economy. To economise on what are admitted necessities and then produce a large surplus at the end of the year is something for which I do not think the Chancellor of the Exchequer deserves anyone's praise. One thing which this large surplus has shown up, it has not been noticed by many hon. Members, is the fact that the co-operative tax last year can hardly have been an
urgent financial necessity. In fact, it was what many people declared it to be, a mere piece of political spite.

Mr. T. HOWARD: Why should they not help the unemployed?

Sir S. CRIPPS: Why should not the £31,000,000 help the unemployed? That is a much better question to ask.

Mr. HOWARD: It has done.

Sir S. CRIPPS: The hon. Member has not followed the course of the Debate; it is not helping the unemployed at all. The surplus of £31,000,000 which has been built up, of course, cannot be claimed as being a balance from any particular source. It is the balance of two figures, the totals on one side and the totals on the other side. But in arriving at that balance and in accomplishing it, the economies and the cuts which have been made have, of course, played a very large and substantial part. One always imagined that where the services of the community have to be supplied through taxation, as they have to be, the principle of taxation to be adopted was to place the heaviest burden on the shoulders of those who could best bear it, but the ordinary Budget seems to proceed upon the basis that you place the heaviest burden on the shoulders of those who can least afford it. In fact, it might better, I think be described in those very well-known words:
Unto every one which hath shall be given; and from him that hath not, even that he hath shall be taken away from him,
typifying the action, as regards the means test, on the families of the unemployed. Apparently the right hon. Gentleman is very justly delighted at the patriotism which the people of the country have shown in having borne up against the cuts and sacrifices of the past two and a-half years, and I have no doubt everybody will agree with him in that; and he feels, fortunately, satisfied that as regards some of those people, especially the families of the unemployed, who have to put up the whole of the money under the means test, they can be relied upon to continue in their patriotism without any bribe or without any contribution from the Exchequer to assist them, which is, of course, a very high tribute to their patriotism. On the other hand, so far as
the Income Tax payers are concerned, he obviously does not feel the same confidence, and therefore as regards the Income Tax payer he is providing a little douceur of 6d. in the pound in order, no doubt, that his patriotism may survive the ensuing year.
We feel that it is the patriotism of those who have suffered most and who are the least able either to make vocal their demands or to exert any economic power within the State which should first have been rewarded by removal of the means test. The cuts and the economies which the right hon. Gentleman has dealt with in his Budget speech do not in any degree exhaust the real cuts and economies that were made. He has mentioned in the benefits the cuts in salaries and the extra taxation, but he has not dwelt with the cuts in social services or with the increase in the unemployment contributions, which is just as much an increase as the increase in the Income Tax, and he has not dealt with perhaps one of the most tragic of all the cuts, the losses under the National Health Insurance, owing to the failure of the Government to make up the contributions of the unemployed, a paltry £100,000 which is going to cause hundreds of thousands of people to suffer as a result of it. Surely that must be something that the right hon. Gentleman has overlooked. He could not consciously have passed that over—so small a sum of money with so vast a result to the people who are being deprived in this particular of all the benefits of the National Health Insurance Act—if he had had it drawn to his attention. I certainly give the right hon. Gentleman the credit for humanity within the system in which he is working, and I do hope that he will be prepared to reconsider this one small item anyway, because I know he will appreciate what a matter of vital importance it is to these people, who are losing all their benefits under this Act; and the £100,000 really is not a matter of any importance compared with the large sum which he has at his disposal.
Then there is the stoppage which was made in the housing programme, a programme entirely for the benefit of the working classes, and there are the revenue tariffs, which were imposed as revenue tariffs, which are a form of indirect taxation, which were designed to raise money
and not for protective purposes, and which fall almost entirely or very largely upon the working classes, owing to the large part in their weekly budget which the commodities covered by those revenue tariffs play. Then there is the economy of the means test, already mentioned, operating as it does, not directly in all cases, though in many cases, upon the unemployed man, but operating upon his family and his relations; and there is that terrible anomaly now in the Income Tax law whereby a man who is obliged to support his dependents through the operation of the means test is not allowed any rebate in respect of their support, a thing which clearly must have been included if it had ever been contemplated at the time the original Income Tax Acts were drawn. It is a thing which I presume would not cost the Chancellor of the Exchequer any serious sum of money and in regard to which I think, if I am right—I do not pledge my recollection—when the matter was raised last year it was said that sympathetic consideration would be given to the point as soon as there was a possibility of supplying any money with which to allow this rebate upon income to be made.
Out of all those losses which go to the living standards of the working classes, there has been one, and only one, benefit coming from this Budget, and that is the £3,500,000 in respect of transitional unemployment benefit, which will be paid out of the moneys from the Budget. It is quite true that the standard unemployment benefit will be raised as well, but that has nothing to do with the Budget at all. That is just an artistic touch of window-dressing which is put in to add weight to the special sum of £3,500,000, to make it look as if it were really something very much more, and it has no relationship to the Budget. It is purely part of the Unemployment Fund under Part 1 of the Unemployment Bill, and if the Chancellor of the Exchequer's figures are correct, it would have arisen anyway immediately the Statutory Committee got to work upon the Bill.
As regards the question of the existing surplus, I suggest to the right hon. Gentleman, as has been suggested before, that if this cannot be used for the distressed areas or some such really useful purpose, it is not necessary to use it for paying off the National Debt. That
he himself said last year, and he has said again, in his Budget this year, that it is not necessary, it is not expedient, to put aside sums for the Sinking Fund. Why, therefore, cannot it be used in any event for paying off a proportion on the debt on the Unemployment Fund? It would, as the right hon. Member for Hillhead (Sir R. Home) pointed out, save over £1,000,000 a year in interest if it were so used—the difference between 4¼ per cent., which I think was the figure the right hon. Gentleman gave, and the 1 or 1¼ per cent. at which the money can now be raised by the Treasury.
However one judges the Budget, whether on equality of restoration, as it is called, there is clearly no equality when one takes into account all the other matters, except just the standard benefit and the transitional benefit. If one takes into account the means test and what has contributed to that, the loss of all the social services, the National Health Insurance, and all the other matters that I have mentioned, there is nothing like a restoration to half the standards of 1931. Judged on the next criterion, of ability to pay, which is one of the criteria of taxation, quite clearly you are continuing to exact a sum of money of something like £17,000,000 from the unemployed while you are not continuing to exact a similar sum or a little larger sum from the Income Tax payer. There can be no possibility of doubt that the Income Tax payer is the better able of the two to stand the drain of that money.
So that, judged from that criterion, it clearly cannot be sound. Judged from the point of view of the community it is leaving out of view altogether the rival classes; and, looking at it from the point of view of the benefit to the community, in my submission the extra spending power which is being created by this remission is going entirely into the wrong pockets in the present economic circumstances. It is going to be spent on luxury, investment and speculation. So far as that is concerned, as long as there are hundreds of thousands of people in this country who are admittedly urgently in need of vital necessities it cannot pay the community to put money into the pockets of people who are to spend it on luxury. Every luxury made, so long as there is a need for the ordinary, simple commodities of life, is a waste to the
community. Once you have satisfied all the elementary needs make as many luxuries as you like, but you do not want to encourage luxury expenditure so long as you have want in regard to simple commodities.
Nor do you want to encourage speculation. There is too great a danger of speculation already in this country. With all the cheap money there is, with the psychological effect of the beginning of what may prove to be a little boom, you have already the symptoms of speculation and the circumstances which may lead to a very ugly depression after quite a small boom. As regards capital goods investment, while you have unused the vast productive capacity that you have in this country to-day, you do not want more money put aside for investment purposes. In fact what you want is to create the maximum of spending power for consumption of goods, and, if you do that, this £24,000,000 ought to go into the pockets either of the wage-earners or of the unemployed, or someone who is low down in the scale and who cannot at present buy necessities.
I shall not repeat to the right hon. Member for Tamworth (Sir A. Steel-Maitland) the observations I made on that point before he came back to the House. The real point which the right hon. Gentleman has put forward is that this is just psychological, and that point has been put forward by several other right hon. and hon. Gentlemen. That is just the scheme of capitalism. It measures all prosperity by profits. It believes that if you can work up the profits, you can work up Stock Exchange booms, you can get an era of prosperity which will carry you through, as the right hon. Member for Hillhead said, on a long and arduous path back to where we were before the War, that is to the time when unemployment existed, when the Poor Law was still administered, when slum housing was perhaps worse even than now, when health services were inadequate and education was bad. All the vicious concomitants of capitalism existed then as they exist to-day. That certainly is not what we want to get. We do not want to go back to any stage of capitalism at all.
If that is the path which the Chancellor has as his objective, we part company with him as regards objective. It
is quite true that by the economic measures that he is taking he very likely will be able to force up profits, just as Mr. Roosevelt is doing in America. As a result he may get the creation of a boom—a boom in profits, not in the prosperity of the workers of the country—and as a result of that boom he may drive money into fresh capital goods, which will create a certain amount of employment and will produce more consumption goods, and then he will again start working up to the vicious crisis which the right hon. Member for Tamworth foresees, when he will get the flood of consumption goods again on the market, when prices will fall and he will be back again where he started.
It is that problem which the Chancellor and his colleagues have to meet. It is not a problem of getting a temporary reaction which may cause a boom for a year or two. It is the problem of solving the whole economic system so that you do not get the necessity for the recurring slump after the recurring boom, but so that you can devise a system by which you get a continual distribution of an abundance proportional to the technical productive capacity of the country. That is something which is not even being aimed at in this Budget. The Budget is aimed at something quite different, at the creation of a from of society in which you have a profit-earning class who are always in a considerable measure of prosperity but sometimes much greater than at others, and on the other hand another class lower in the scale who are never in a condition of prosperity but sometimes suffer greater want than at other times, and for whom there must inevitably always be less employment.
Until the right hon. Gentleman discovers some means of altering the capitalist system so as to cure the defects which arise from that stratification in society, the classification in the whole community which leads to that inevitable result and leads to reduced consuming power, which brings about the slumps in capitalism—until he can do that he will not be able to do anything more than bring in what was described yesterday as a pedestrian Budget, a Budget in the best traditions of orthodox capitalism, even so good in the traditions that it
ignores the inevitable penalties. The only cure is to depart from the system which underlies this Budget, to realise that that system in modern circumstances cannot cope with your problem, and to enter upon the experiment of trying a new and better system.

10.15 p.m.

Mr. CHAMBERLAIN: Before I proceed to comment upon the general course of the Debate, I want to make a personal statement upon one matter which was raised at the beginning of our discussion to-day by the hon. Member for Gower (Mr. D. Grenfell). The hon. Member is not one who is careless of his phrases or who throws about charges recklessly, and therefore I feel it all the more necessary to take some notice of a charge which he made against me, namely, that I had shown a want of generosity towards my predecessor Lord Snowden in trying to thrust upon him responsibility for the unpopular sacrifies of 1931, while I denied to him any credit for the restoration which has taken place to-day. I should be extremely sorry to think that I had used any words which could fairly be said to have given my audience, whatever it was, such an impression as that. I do not think that I have ever shirked responsibility either individually or collectively, and, as a colleague of Lord Snowden's at the time when the cuts were made, my responsibility was just the same as that of any other Member of the Government which was collectively responsible for the measures taken. I have never suggested for one moment that I was not entirely in favour of those measures, as indeed I was. I hope that the hon. Member's impression which I am sure was correctly stated by him, was at any rate not shared by the great majority of those who listened to him.

Mr. D. GRENFELL: I had no intention of stating that the right hon. Gentleman had himself had that intention. I congratulated him upon his speech. I said it was very skilfully done, but that I thought there was a little propaganda in it. While I did not impute to him an attack on Lord Snowden, I think he certainly invited the public to believe that Lord Snowden and himself had been largely responsible, at least, for the cuts being imposed.

Mr. CHAMBERLAIN: So we were, and I think after his own remarks the hon. Gentleman is certainly not in any position to reproach me with having introduced a little propaganda. I do not wish, however, to make too much of the incident. I am satisfied that the hon. Member did not impute to me any intention of having been unjust or ungenerous to Lord Snowden for whom I had and have the greatest respect. The hon. and learned Member for East Bristol (Sir S. Cripps) has told us that there is no hope for this country as long as we stick to the capitalist system. He has, of course, to fight against a series of disappointments which have befallen his party in the course of the last few days. I am afraid his party were seriously disturbed by the fact that there was a surplus at all, because I remember that last year the Leader of the Opposition—whom I hope we may presently see among us again—in following my Budget speech expressed the conviction that there never would be any improvement from the policy of the Government. He declared his complete willingness to be judged by the way that prophecy would turn out, and he went on to say that if, indeed, there were any prospect of recovery in trade and in general conditions from the policy of the Government, then the Government might be said to have been justified in keeping the people suffering, as they had done according to him. If that be the measure of justification that he required, then I think we have amply earned our justification.
When I am charged with bad accounting and bad estimating because the estimate did not come out exactly the same as the actual out-turn of the year, that is a charge to which every Chancellor of the Exchequer must be subject in turn because these estimates come out almost invariably either under or over the actual out-turn of the year. Indeed, if it were otherwise it could only be by pure accident. All I can say is that the Chancellor of the Exchequer who ends his year with a realised surplus counts himself more fortunate than the Chancellor who is obliged to end it with a deficit.
There are just one or two items to which I shall make some allusion. I would, first like to mention the speech of my hon. Friend the Member for Farnham (Sir A. M. Samuel) in which he called attention to the amount of the Floating
Debt and stated his views as to the de sirability of reducing it. He will not, I am sure, expect me on this occasion to analyse his figures, but I can assure him that the amount of the Floating Debt is always kept very carefully in mind and under consideration by the Treasury. As I am mentioning his speech, I would like also to recall his desire to see the commercial bill once more come into more general use. I entirely agree with that view. I think it is one which commends itself to the best informed opinion, and I hope very much that his wishes in that respect may be fulfilled and that we may see traders making more use of the commercial bill.
The point raised by my hon. and learned Friend the Member for Bridgwater (Mr. Croom-Johnson) with regard to Victory Bonds being tendered in payment of Death Duties is a rather technical one with which I do not think it would be fair to trouble the Committee, but if my hon. and learned Friend will allow me, I will send him a note upon the subject. Then we had some very interesting observations from my right hon. Friend the Member for Tam-worth (Sir A. Steel-Maitland). I think that the hon. and learned Member for East Bristol is perhaps a little sanguine in thinking that my right hon. Friend is on his way to becoming a Bolshevist. If we could devise some plan by which we could foresee the course of trade and control it so as to iron out those cycles and fluctuations to which we have been subjected in the past, it would be a great service to the world. I am not disposed to throw cold water on my right hon. Friend's suggestion. I would only venture to say to him that I doubt very much if a single country can alone provide a code which will be accepted by the whole world. If there is to be agreement upon this subject, it must be reached not merely among economists in one country—although that alone is an almost impossible task—but a general concensus of opinion must be obtained, at any rate, among the principal countries of the world.
The hon. and learned Member for East Bristol said that the Budget does not reflect the general direction of the policy of the Government. I am prepared to admit that there is a special and, if you like, a unique feature about the present Budget which certainly distinguishes
it from any other Budget which I recollect or, indeed, which is within the recollection of any of us. We have arrived at a time when it is possible to give some relief to the country, and in considering how that relief should be distributed, I have laid down for myself a principle which has not been directly challenged, namely, that the first call upon the surplus must be for those who suffered and made their contributions to the national emergency in 1931. If once that principle be admitted, obviously it rules out of consideration any question of redistributing the surplus according to your political conceptions until those calls have been met and fulfilled.
Therefore, the Budget is open to the criticism, if it be a just criticism, that it does not reflect the ideas of the National Government as to how the wealth of the country should be distributed. But I may say that if we were to be carrying out to-day the views and the class prejudices of which so many hon. Members opposite have accused us; if, indeed, we were guided by class prejudices in our intentions in this matter, this Budget would be very different from the one which has been presented. I would further say that, disappointing as it may be to the Opposition to find that we have put aside entirely all party conceptions, all class conceptions, and have simply made an effort in this Budget to restore as equally and as fairly as possible among those who suffered in 1931 what there is to distribute, at any rate to those who did make that contribution our action implies this further undertaking, that if they have not had this year the whole of their sacrifices made up to them they still remain with the first claim on our consideration.

Sir S. CRIPPS: Would the right hon. Gentleman say whether that includes the abolition of the means test?

Mr. CHAMBERLAIN: No, Sir; that is not in point. I do not mean to discuss the means test here, because it is, perhaps, more suitable for discussion upon the Unemployment Bill; but, as everybody knows, the principle of the means test was accepted by many hon. Members opposite, although it is true that in the electoral pressure afterwards a good many of them ran away. But at
any rate, in my view, the whole grievance of the means test does not arise out of the existence of a means test but out of particular instances of the administration of the means test in different parts of the country.
I would like now to come to one subject which has been commented upon in various quarters of the House. Some of my hon. and right hon. Friends behind me have chided me a little, very gently, for what they think is an undue caution in my estimates for the current year. And that which is described by them as caution is translated by other hon. Members, not quite so friendly perhaps, into a sort of Machiavellian design with an eye upon the next General Election. I want to say at once that there is no foundation for any idea that I have deliberately under-estimated the Tevenue for this year with some sinister intention behind it. Because, I suppose, there was a general belief that the country was on the mend, that things were better all round, that a surplus had been realised in the past year and that, generally, optimism was prevalent, there was a greater interest in and greater attention was paid to the possibilities of this Budget than to any which I have had anything to do with before. And quite a lot of irresponsible people, as well as some people who, at any rate, had had responsibility, gave the public the benefit of their views as to what the surplus might be. Almost without exception they put it very much higher than the figure at which I have put it. It is not my fault if they went wrong in some of their shots at what the surplus might be, because I think my right hon. and gallant Friend the Member for Ripon (Major Hills) would agree with me that no one without inside information, which the Chancellor of the Exchequer alone possesses, can do more than make a shot, although if he has had my right hon. and gallant Friend's experience he has a very much better chance of making a good shot than those who have had no such experience.
I want for a moment to examine some of the suggestions that have been made as to where I differ from some of those who have put the revenue higher, and in order that we may see whether there is discoverable any gross flaw or error on my part. Take, for example, the speech
of my right hon. Friend the Member for Hillhead (Sir R. Home) to whom I am very grateful for his approval of the Budget as a whole. He said that it was hard to see why I should have estimated the revenue this year at £13,000,000 less than it was last year. That is not the case. How did he arrive at £13,000,000? He said there was a difference of £2,000,000 between the £29,000,000 surplus and the £31,000,000 surplus for last year, and he added to that the £11,000,000 which went to meet the payments on the American Debt and the Sinking Fund. I think he will agree with me that the figure at which he arrived is not really the difference between the revenue for this year and the revenue for last year; it is the difference between the surplus of this year and the surplus of last year to which he referred, and which, of course, does not necessarily mean a lessening of revenue. The real figures of revenue are as follow: Last year, the total revenue that we received was £724,567,000. There was a windfall in the surplus of £10,500,000 from the Death Duties, and £10,000,000 was taken from the War Loan Depreciation Fund. Subtracting that from the figure which I just gave, the revenue last year, excluding those two items, was £704,000,000. This year I estimated the revenue at £727,000,000, but from that you must, of course, take the £12,000,000 which I allowed for the extra receipt of Income Tax on the January instalment. That leaves £715,000,000; so that instead of an actual decrease in revenue this year, there is in fact an actual increase of estimated revenue this year over revenue received last year of £11,250,000.
My right hon. Friend thought that we ought to allow more for arrears coming in from the previous year. That was what he said and it sounded reasonable and fair. We were remitting 6d. of the Income Tax to enable people to be more ready to pay up their Income Tax. I cannot help thinking that my right hon. Friend still has a recollection of the time when he was holding my present office, and when there was a very large increase in the payment of arrears of Income Tax following upon a reduction in the Income Tax. He will remember that at that time there were a couple of War taxes, and the rate of collection of Income Tax was much slower. There has been an enormous change since then. The rate
of collection in Income Tax has been improving until it has now got to the point where the Income Tax is paid up so well that there really is very little margin for an increase in the collection of arrears that one can possibly take into account.
Coming to the question of the Death Duties, I agree that on that question there is room for difference of opinion. You may take the Death Duties, or the Stamp Duties, or Customs, and you may say that on any of these items you take a pessimistic view, or an optimistic view, or something between the two. No doubt my right hon. Friend is correct in saying that he is of a more buoyant nature than I am—[HON. MEMBERS: "Flamboyant!"] At any rate, I am quite ready to believe that he might have put the figure higher than I have done, but that is where these differences of temperament come in. What I want to point out is that, even making allowance for differences of that kind, one can still hardly expect that the £29,000,000 of surplus for which I have provided could be increased to double or treble that amount. There might well be a difference of, perhaps, £10,000,000, but when it comes to £20,000,000, £30,000,000 or £40,000,000, I do not think that that would be possible even for a person of flamboyant temperament—

Sir R. HORNE: I never suggested that.

Mr. CHAMBERLAIN: Hon. Members will no doubt have observed that I have not made any allowance for Supplementary Estimates, although very frequently in past history there have been Supplementary Estimates for items of expenditure which could not be foreseen at the time of the Budget. It may be, then, that next year there will again be a difference between the Budget as I have estimated it and that which will actually turn out to have been the result of the year's operations. There again I would say that, if there is to be a variation one way or the other, I personally would rather see a surplus than a deficit. Confidence has been so steadily progressing, feeling all the time that each step forward was a step taken for good, which would not have to be retraced, that I should be very sorry if that confidence were in any way shaken by what should appear to be a set-back, as I think would inevitably follow upon the declaration of a deficit on the Budget.
Then there comes the question of the destination of the realised surplus which has just been shown. It has been suggested that, seeing that I had not made any provision at the beginning of the year for the repayment of debt, there is no reason why I should use for that purpose the realised surplus at the end of the year. I do not think it is a very good plan, if you want to inspire confidence, to change your principle according to the way in which it may happen to suit you in different years. In the year before, we had a deficit of £32,000,000, and that had to be added to the National Debt. It seems to me that in the following year, if you have a surplus of almost exactly the same amount, you really want a very good reason if you are not to make good what you put on to posterity the year before, and take it off again. I do not think that this suggestion would ever have been made if it had not been connected with the other matter of the relation between the Exchequer and the Unemployment Insurance Fund, and as several speakers have alluded to it, I would just like to say a few words on that subject. In the first place, if we are going to discuss whether the Exchequer is to relieve the Unemployment Insurance Fund of part of the debt, I see no reason at all why you should connect that with the amount which you happened to realise as a surplus at the end of last year. If it is right that the Exchequer should take over part of the fund, that has nothing whatever to do with the surplus last year, nor has the amount which the Exchequer should take over anything to do with the surplus of last year.

Sir R. HORNE: Except that it makes it easier.

Mr. CHAMBERLAIN: On merit there is no connection between the two. If we decided, for example, that it was right that the Exchequer should take over part of the Unemployment Fund, my right hon. Friend says it would make it easier if we used the surplus which we had realised last year. I do not think there is anything in the point, because we should have to borrow money whichever way we did it, and the effect on the National Debt would be the same thing.
I want to consider the merits of the case for a minute or two. Why should
the Exchequer take over any part of the debt of the Unemployment Insurance Fund? Various reasons have been given, but perhaps what sounds the strongest reason, and the one which has been repeatedly brought forward by the right hon. Gentleman the Member for Darwen (Sir H. Samuel), is that the Royal Commission recommended that the Exchequer should take over two-thirds of the Debt. I cannot help noticing that hon. and right hon. Gentlemen are always picking out parts of a report which happens to suit the views that they are putting forward and forgetting other parts which operate in other directions. Perhaps we all do, but on this occasion there has been a forgetfulness of the fact that the Royal Commission stated that in their view the Exchequer ought not to make the same contribution as the employers and the employed. The bulk of the contributions ought, they said, to fall upon industry, and they said the only reason why they did not recommend that the Exchequer contribution should be reduced was because, in the circumstances in which they were then considering the fund, that again would have rendered the fund bankrupt and it would have had to come back for a deficiency grant. Let us also remember that, according to the recommendations of the Royal Commission, the assistance given to local authorities would have been less by nearly £3,000,000 than that which has actually been arranged under the Unemployment Bill. That £3,000,000 is exactly the amount which was recommended by the Royal Commission to be the Exchequer contribution towards the Unemployment Fund. So it will be seen that, as far as the Exchequer is concerned, it is in the same position that the Royal Commission proposed that it should be.
I also want the Committee to bear this further fact in mind, which in my view has a most important bearing on the whole question. The Commission was examining the condition of the fund on the basis of an unemployment level of 3,000,000 and, therefore, it was impossible for them to devise a scheme which would have made the fund self-supporting on the basis of 3,000,000 unemployed unless they put two-thirds of the debt on the Exchequer. Now conditions have changed completely. We no longer have an unemployment figure
of 3,000,000. We are dealing with a figure of 2,200,000. The fund is in an entirely different condition and has every prospect of an ample surplus. It will be possible for the statutory committee to consider, if they choose, some reduction in the contributions. On the other hand, do not let the Committee forget that, if you are relieving the fund at the expense of the Exchequer, you are reducing the amount that is available for the general relief of the taxpayer or for people whom you wish to relieve by the Budget next year.
I must pass on to one or two other matters. Although the principle which I have enunciated, and repeated again this evening, which has governed me in the first instance in considering how the surplus should be disposed of, has not been challenged directly, yet indirectly, of course, all the speeches from the opposite benches have thrown it over altogether. The hon. Member for Gower said quite frankly that his view of the proper function of a Chancellor of the Exchequer was to use taxation in order to effect a wider distribution of wealth. I do not think that it is really necessary for me to discuss any abstract principle of that kind, because, once you admit that there is a special claim on behalf of those who suffered in the emergency crisis of 1931, you need not discuss the merits of any other proposal at all until we have sufficient money in order to meet those claims in full and have something over to be distributed among other people. Therefore, the only question which, I think, I need further discuss is whether, if you accept that principle, the distribution which I have proposed among the different classes who are concerned in the crisis of 1931 is fair.
I have tried to make an honest attempt to distribute that surplus as fairly as possible—it is clear that you cannot distribute it equally—in accordance with the amount of contributions towards the nation's needs which was made by the various people who were affected. I must admit at once that you cannot get a mathematically correct allocation. The sacrifices were certainly not mathematically equal at the time. The contributions were not equal and, of course, when you have to divide people into classes, you have to ignore to some extent the fact that out of each class there are a
number of individuals whose individual circumstances are different. Therefore, I do not pretend that in the most literal sense the restoration which I have attempted to make is an equal restoration. I only say that it gets as near to that as I can devise, and I doubt very much whether it would be possible to find any solution which would not be open to criticism on the same grounds. There is, of course, one exception to the general rule that I have laid down for myself, that I would try to make a restoration of the sacrifices. The exception is the unemployed themselves. It is very satisfactory that from all parts of the House, even from the benches opposite, there is the encouragement that that exception was fully justified. The hon. and learned Gentleman said that I had followed the principle that to him that hath, shall be given, and from him that hath not, shall be taken away even that which he hath. If to take away from the married man and his family 23s. 3d. and give them 26s. in return is an illustration of that process, then I think those that have not, would be very glad to have a repetition of it.
Of course, there is the case of the indirect taxpayer, and once again I would like to say that I regret very much that it was not possible for me to do anything to modify the Entertainments Duty. The hon. Member for Lichfield (Mr. Lovat-Fraser) put in an eloquent plea a little while ago for the theatres, and similar institutions where there is employment of a considerable number of people. He will see that I could not possibly make an exception to my first general principle in favour of the theatres without making an inroad in it which would, of course, be left open to everybody else who could make as good a case and say that any particular relief would not cost a great deal of money and would give a great deal of satisfaction. It is true that an alteration in the field of the Entertainments Duty was part of the emergency measures which were taken in 1931, and that I have not done anything on this occasion to give back the extra taxation which was imposed in that way. The resources, however, were not enough to go round. You cannot divide up the relief into rations, and seeing that there had been some relief given to the indirect taxpayer last year, I felt that the Entertainments Duty must wait for
further consideration at least until anoher surplus was available.
More attention, perhaps, has been given to the question whether, granted that a remission of Income Tax should take place, it should not have been given by restoration of the allowances rather than by reduction of the standard rate. It is certain that, if I had decided in favour of the allowances, every hon. Member opposite would have denounced me and said that I ought to have reduced the standard rate. I am, however, satisfied that, in spite of any criticism that may be made, while agreeing that a particular Income Tax payer who has a comparatively small income is not getting the same amount of restoration as the unemployed man, or even the teacher or the policeman, there is another consideration to be borne in mind. Who are these small Income Tax payers for whom so much sympathy has suddenly developed on the other side of the House? It is not quite a reversal, because I remember that one hon. Member said that he had no sympathy with them at all, because they always voted for the Government. They are largely shopkeepers, people employed in offices, people engaged in commerce, or in one industry or another.

Mr. BATEY: And miners.

Mr. CHAMBERLAIN: I am not saying that there are no miners among them; I know there are, but the bulk of them will be found among the classes I have mentioned. Take the shopkeepers. Can it not be said that they are going to get a great additional benefit from reduction of Income Tax? Everybody must know—everybody, at any rate, who has talked with shopkeepers during the last few days—that they anticipate that the fillip, the stimulus which will be given to the purchasing power of the people who buy in shops will undoubtedly give them more business than they had before. In the same way, take the people who are engaged in non-manual work in trade or commerce. There is something more important for them to have than to get their Income Tax reduced by a few pounds a year, and that is that their employment should be secured. If by reduction of the standard rate of Income Tax, you can do something to stimulate the expansion of trade and industry, then you are doing
something to secure their employment, and this I venture to say ought not to be left out of account.
We were told last year something about the psychological effect of a reduction in the Income Tax. Now that the reduction has taken place, hon. Members opposite belittle the idea of any psychological effect. I will not attempt to measure the psychological effect of the reduction in the Income Tax, but those who read their papers know that the effect has already been considerable. I would ask hon. Members to say what the psychological effect in the business world would have been if there had been no remission of Income Tax. I have a very strong view that it would have been taken as a disappointment, as a set-back, as a check to the confidence which is generally felt, and it would have been so regarded by every Income Tax payer in the country, large and small.
I want to make an observation or two upon a more general subject. The right hon. Member for Darwen seemed to see some inconsistency in the fact that I had pointed to the spread of economic nationalism as one of the factors to be reckoned with in estimating the prospects of the future, and at the same time he said that the National Government were themselves contributing to economic nationalism by the Ottawa Agreement, and tariffs. This spread of economic nationalism is a comparatively new factor. It has arisen, no doubt, in a very large measure, out of a fear on the part of various countries for their currency, and out of a desire to check the imports of foreign countries into their own countries lest they should have a serious effect upon their currency. It has undoubtedly been reinforced a great deal by the spread of nationalism, pure and simple, a desire to make themselves self-supporting and not to be dependent upon any other race.
Whatever be the cause of it, I am bound to say that I do not see any reasonable prospect of its being diminished, at any rate during the next few years, and we as a country have to consider what is going to be our policy in the face of a reality of that kind. The right hon. Gentleman, apparently, would give a lead to the world by at once withdrawing all our scientific tariffs and opening our doors to foreign importations
again, in the hope that foreign countries would make a reciprocal gesture.

Sir H. SAMUEL: The right hon. Gentleman is not quoting anything that I have said.

Mr. CHAMBERLAIN: No, but I am judging from what the right hon. Gentleman said that he has not changed his views upon the matter.

Sir H. SAMUEL: The policy that I think should be adopted in present circumstances is not that which the right hon. Gentleman is now attributing to me.

Mr. CHAMBERLAIN: I can see the right hon. Gentleman crossing the Floor of the House again. We have to consider that international trade, so far as we can observe, has a tendency still to contract. We have taken such measures as we can to secure that we may obtain our portion of international trade by making commercial agreements with various foreign countries, and it was because we saw this coming that we went to Ottawa, in order that we might lay the foundations there
of inter-Imperial trade, which was not at the moment capable of indefinite expansions, because it must be limited by the population of those countries, but nevertheless shows us an almost illimitable opportunity in the future.

Question, "That it is expedient to amend the law relating to National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with finance," put, and agreed to.

Resolution to be reported upon Monday next.

Committee to sit again upon Monday next.

The remaining Orders were read, and postponed.

ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Captain Margesson.]

Adjourned accordingly at Four Minutes after Eleven o'Clock.